Professional Documents
Culture Documents
2010
BBVA Group Highlights
Core capital ratio
(Percentage)
9.6
8.0
6.2 6.2
December December December December
2007 2008 2009 2010
BBVA Group Highlights
(Consolidated figures)
31-12-10 Δ% 31-12-09 31-12-08
Balance sheet (million euros)
Total assets 552,738 3.3 535,065 542,650
Total lending (gross) 348,253 4.8 332,162 342,682
Customer funds on balance sheet 378,388 1.7 371,999 376,380
Other customer funds 147,572 7.6 137,105 119,034
Total customer funds 525,960 3.3 509,104 495,414
Total equity 37,475 21.8 30,763 26,705
Stockholders' funds 36,689 25.0 29,362 26,586
Income statement (million euros)
Net interest income 13,320 (4.0) 13,882 11,686
Gross income 20,910 1.2 20,666 18,978
Operating income 11,942 (3.0) 12,308 10,523
Income before tax 6,422 12.0 5,736 6,926
Net attributable profit 4,606 9.4 4,210 5,020
Net attributable profit excluding one-offs (1) 4,606 (12.4) 5,260 5,414
Data per share and share performance ratios
Share price (euros) 7.56 (40.6) 12.73 8.66
Market capitalization (million euros) 33,951 (28.8) 47,712 32,457
Net attributable profit per share (euros) (2) 1.17 8.3 1.08 1.31
Net attributable profit per share excluding one-offs (euros) (1-2) 1.17 (13.3) 1.35 1.41
Dividend per share (euros) (3) 0.42 - 0.42 0.63
Book value per share (euros) 8.17 4.3 7.83 7.09
Tangible book value per share (euros) (4) 6.27 6.3 5.90 4.99
P/BV (Price/book value; times) 0.9 1.6 1.2
Price/tangible book value (times) (4)
1.2 2.2 1.7
PER (Price/Earnings; times) 7.4 11.3 6.5
Yield (Dividend/Price; %) (3) 5.6 3.3 7.3
Significant ratios (%)
ROE (Net attributable profit/Average equity) 15.8 16.0 21.5
ROE excluding one-offs (1) 15.8 20.0 23.2
ROA (Net income/Average total assets) 0.89 0.85 1.04
ROA excluding one-offs (1) 0.89 1.04 1.12
RORWA (Net income/Average risk-weighted assets) 1.64 1.56 1.94
RORWA excluding one-offs (1) 1.64 1.92 2.08
Efficiency ratio 42.9 40.4 44.6
Risk premium 1.33 1.54 0.83
NPA ratio 4.1 4.3 2.3
NPA coverage ratio 62 57 92
Capital adequacy ratios (%)
BIS Ratio 13.7 13.6 12.2
Core capital 9.6 8.0 6.2
Tier I 10.5 9.4 7.9
Other information
Number of shares (millions) 4,491 3,748 3,748
Number of shareholders 952,618 884,373 903,897
Number of employees 106,976 103,721 108,972
Number of branches 7,361 7,466 7,787
Number of ATMs 16,995 15,716 14,888
General note: The consolidated accounts of the BBVA Group have been drawn up according to the International Financial Reporting Standards
(IFRS) adopted by the European Union and in conformity with Bank of Spain Circular 4/2004, together with the changes introduced therein.
(1) In the third quarter, both for 2009 and 2010, includes capital gains from the sale-and-leaseback of retail branches which have been allocated to generic
provisions for NPA, with no effect on net attributable profit. And in the fourth quarter of 2009, there was an extraordinary provision and a charge for goodwill
impairment in the United States. In 2008, capital gains from Bradesco in the first quarter, provisions for non-recurrent early retirements in the second and
fourth quarters and provision for the loss originated by the Madoff fraud in the fourth quarter.
(2) Earnings per share for periods prior to the share capital increase have been adjusted to the said capital increase as per IAS 33.
(3) The dividend corresponding to 2008 includes €0.501 in cash and €0.129 in payment-in-kind (delivery of shares valued at April 17th, 2009 closing price).
(4) Net of goodwill.
“In this complex environment,
BBVA’s results have been
excellent. As a result,
we are once more one of the best
performing banks in the world.”
Francisco González, Chairman and CEO
Contents
2 Executive summary
Letter from the Chairman ................................................................................................................................................................................................................................ 4
BBVA in 2010 ................................................................................................................................................................................................................................................................... 8
2011: The economic background and BBVA positioning .......................................................................................................................................... 14
The team ........................................................................................................................................................................................................................................................................... 34
The BBVA brand......................................................................................................................................................................................................................................................... 39
Corporate responsibility .................................................................................................................................................................................................................................. 42
70 Risk management
Global Risk Management: BBVA Group’s risk management function ..................................................................................................... 72
Integration of risks and overall risk profile ................................................................................................................................................................................ 73
Credit risk .......................................................................................................................................................................................................................................................................... 75
Structural risks............................................................................................................................................................................................................................................................. 90
Risks in market areas ......................................................................................................................................................................................................................................... 94
Operational risk ........................................................................................................................................................................................................................................................ 98
Risk management in non-banking activities ........................................................................................................................................................................ 101
Management of ESG risks........................................................................................................................................................................................................................... 103
Executive
summary
“The Liga BBVA HD Marina loves technology, but Pablo, her father,
is not entirely convinced by it. He still can
has made him see BBVA HD application for iPad has made him
see the “technological invasion” in a new light.
invasion in a
new light”
3
Letter from the
Chairman
“ The year 2010 has been a good year for BBVA,
with a new boost to our competitive
positioning with respect to the future”
4 Executive summary
around 8.6% once the investment in Garanti is a joint company in the credit card business with
6 Executive summary
“ For the first time, the information on corporate responsibility
has been fully integrated into the Financial Report. In this way,
we have anticipated the most innovative trends at the global level”
better future for people. We have made progress the United States. Finally, in 2010 we joined forces
to integrate corporate responsibility across the
Group’s whole value chain. At the same time,
with the Organization of Ibero-American States
to form the largest alliance between a private
“ The year 2011
we have reaffirmed our commitment to the entity and an international institution to promote will also
United Nations Global Compact, in particular education in Ibero-America. This alliance is part of
to the Millennium Development Goals. For the Educational Goals for 2021 project, which will be a difficult
the first time, the information on corporate benefit more than eight million people by 2021.
responsibility has been fully integrated into the one. At BBVA
Financial Report. In this way, we have anticipated
the most innovative trends at the global level
The year 2011 will also be a difficult one. At BBVA
we are clear about the path we have to take.
we are clear
promoted by the Global Reporting Initiative. We have a great team of people: nearly one about the path
hundred and seven thousand professionals
In the field of financial inclusion, the BBVA around the world who make up the BBVA to take. We
Microfinance Foundation is already present team. Thanks to their efforts, enthusiasm and
in Colombia, Peru, Argentina, Chile, Costa dedication we have emerged from this year have a great
Rica and Puerto Rico. It provides microcredits with strength and we will do so again in 2011.
for an average of €700 to more than
team of
620,000 people in Latin America, nearly
25% more than the previous year.
I would like to end by thanking you all, our
shareholders for your continued support for
people, so we
BBVA. I can assure you that this Group will will once more
In terms of financial literacy, the second core work hard with the objetive of becoming a
element of our corporate responsibility policy, better bank every day, continuing to deserve emerge from
we have already reached a million beneficiaries your trust and maintaining our progress in
through programs in Spain, Latin America and constructing the best universal bank in the world. this year
with strength”
March 1, 2011
Francisco González Rodríguez
(+9.4%)
1. Income 14.4
diversification:
balanced business
portfolio with
potential 2.5
2. Costs, anticipation
Emerging Developed
for new growth
cycle…
(1) ) Ex Corporate Activities.
16
8
technology… People Technology
6
Headcount (1) Investment in
4
Year-on-year change 2
“change-the-bank”
(Percentage) BBVA Group and EU average 0
4. …And anticipation (Percentage
of total investment)
in loss provisioning.
43.3
4.7
31.8
27.7
0.5
5,0
4,5
4,0
Good performance 3,5
3,0
45
40
in risk: 2,5 35
5. Balance of NPAs
2,0
30 6. NPA and coverage ratios
–19
1,5
25
1,0
(Billion euros)
0,5 20 (Percentage)
15
0,0
–61%
0
4.3
net additions to NPA 4.1
9.6
8.6
1.5 8.0
1.3
4,5
10
4,0
9
3,5
8
3,0
10. Customer deposits/total assets
(Percentage)
7 9. Funding: not
2,5 6 dependent on ECB…
2,0 5
4
1,5
3 49.9
1,0
2
0,5 47.5
1
0,0 0
10. …and appropriate
financing structure.
2009 2010
78 78 82 85
87 87
92 93 94 100
48 46
43
27 26 22 22 18 15 7 6 0
13 13 8
BBVA 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Peers
100
90
BBVA in 2010 9
80
70
60
50
Boosting future growth
With the acquisition of a holding in Garanti, BBVA has taken a
very important step in the process of creating a diverse and
balanced mix of businesses and geographical areas, with a
high growth potential.
BBVA has become stronger after the agreement to acquire a 24.9% • With a high economic growth. The consensus of forecasts points
stake in Garanti, the leading bank in Turkey. This deal grants it to a real average increase in the country’s GDP of about 5%
access to what is a very attractive market: between 2009 and 2012.
10 Executive summary
• With one of the largest and youngest • The deal includes an option for a controlling
populations in Europe: 75 million people, of stake, with an unbeatable partner (the Dogus
whom 50% are under 30 years of age. Group), and in which the timing depends on
BBVA. In short, the deal is excellent for BBVA.
• It has a sound financial system with a potential
for development. Turkey has the most attractive BBVA’s financial soundness has enabled it to
financial system in Europe, with among the continue strengthening its investments in
lowest lending penetration rates, a good the CITIC Group, one of the main industrial
financial situation and high recurrent profits. conglomerates in China. Specifically, on April
1, 2010, it exercised its purchase option on an
Garanti is also an excellent franchise with a high- additional 4.93% of the share capital of China
class management team: Citic Bank (CNCB), raising its holding to 15%. This
confirmed the Bank’s strategic commitment to
• Garanti is one of the best banking franchises the Asian region, with revenues almost double
in Turkey and enjoys a leading position in over the year. BBVA is also working with CNCB
the main product lines. It has 9.5 million on private banking business, auto finance,
customers, a network of 863 branches and corporate banking, mergers and acquisitions,
total assets of over €60,000m. It is the leading trade finance, market trading and pensions.
lending bank in the country and the third in
share of deposits. It is also the leading issuer of In Latin America, BBVA is strengthening its
credit cards. franchises, which closed in 2010 with business BBVA continues
buoyant and overall increases in market share,
• It has an international-class management and with ambitious organic growth plans. It is to strengthen its
team and an excellent brand image among also worth noting that BBVA has built up its expansion in China
Turkish banks. Garanti has been named the operations in Uruguay with the purchase of and Latin America.
Best Bank in Turkey by Euromoney for the Crédit Uruguay Banco (CUB). The deal makes it
tenth time. the second largest private financial institution in
the country, with a volume of assets of almost
• Garanti shares BBVA’s focus, form of banking €1,900m, and customer funds of over €1,500m.
and firm commitment to technology The integration of CUB will begin when all of
and innovation. The bank has the best the authorizations have been received from the
technological platform in Turkey, which puts it regulatory authorities. This process is expected
in a leading position in terms of online banking. to be complete in the first half of 2011.
75% CITIC
228
Asia
25%
organic
BBVA in 2010 11
450
GEOGRAPHICAL PRESENCE
Brussels
London Dusseldorf
Frankfurt
Tokyo
Moscow
The United States Paris Milan Seoul
11,936 employees
716 branches Switzerland
New York Beijing
Spain Shanghai
Mexico Puerto Rico 28,416 employees
34,082 employees Havana 865 employees 3,024 branches Taipei
1,985 branches 36 branches
Portugal Hong Kong
Panama Venezuela 925 employees
345 employees 5,509 employees 110 branches Mumbai
18 branches 314 branches
Singapore
Ecuador
273 employees
13 branches
Bolivia
209 employees
Colombia
9 branches
5,867 employees
405 branches
Paraguay
372 employees
Peru MAP LEGEND
18 branches
5,715 employees
257 branches BBVA Group countries’ Sydney
Uruguay footprint
Chile 200 employees
5,413 employees 9 branches Branches
172 branches Representative offices
Argentina
5,705 employees Foundations
241 branches Pension funds
12 Executive summary
Business focus: business Organization chart
areas empowerment
supported by holding
units to assure integer and Chairman & CEO
• Finance
• Global Risk Management
Innovation and Technology
BBVA in 2010 13
2011: The economic
background and BBVA
positioning
The economic background
In 2010 the global economy recovered from First, the focus of attention has continued
The global the major slump of 2009, with GDP picking up to be the level of tension in the financial
from a fall of 0.6% to a rise of 4.8%. This figure markets and the various measures that the
economy recovers is not far from level in the years immediately authorities were taking to counter it. But unlike
in 2010, but the before the start of the crisis in the Summer what happened in 2009, in 2010 the origin
recovery varies of 2007. However, the economic recovery is and development of the problems has been
across regions. not evenly spread across regions. Emerging more limited in Europe and, specifically in the
economies, particularly those in Asia and Latin government debt markets, although tension
America, have shown the most robust progress has at times spread to other regions and other
and are turning into the major drivers of global assets. This difference was consolidated in the
growth. markets by stimulating activity through fiscal
policies and guaranteeing the sustainability of
Three elements have given shape to the the public accounts. The peripheral countries
economic developments in the different zones. in the Euro zone have been most affected
14 Executive summary
in this respect, as some of them combined different problems in Ireland and Portugal. The
high deficit levels in their public accounts with public accounts of the Irish economy were The results of
reduced growth prospects. The European threatened by the huge injections of capital
stabilization mechanism was launched in the that its financial system had needed due its
the stress tests
spring of 2010. Greece was the first country in declared solvency problems, which have have confirmed
which a “rescue” plan was undertaken by the been estimated at 30% of its GDP. In the end, the good health
International Monetary Fund (IMF) and the Ireland needed an assistance plan from the of the Spanish
European Union (EU). IMF and the EU. In the Portuguese economy, in
financial system.
contrast, the weakness of the financial system
Doubts about the sustainability of the public is more a question of liquidity than solvency,
accounts in other European countries and but its public accounts still had problems in
the state of some segments of the European complying with the objectives set out, while
financial system gave rise to intense contagion, doubts persisted regarding the economy’s
which resulted in a de facto closure of the potential for growth. In addition, tensions were
markets. The seriousness of the situation led heightened by the uncertainty about the new
to awareness of the need to implement firmer European governance mechanisms and in
measures. All of the European governments particular by the details of the new permanent
presented fiscal consolidation plans, which mechanism for sovereign debt restructuring,
were subsequently strengthened, with the aim which will be in place from 2013 once the
of achieving a deficit of 3% by around 2013. current framework approved in May expires. No return to
These plans as a whole have allowed some recession is
distinction to be made between different The second element that has shaped 2010
expected in the
assets. The fiscal consolidation measures has been the cyclical doubts on the United
were accompanied by structural measures in States economy and the response in terms
United States:
those countries most affected by problems of of economic policy, both the new monetary rather, a gentle
competition and financing needs. expansion introduced by the Federal Reserve slowdown.
(Fed) known as quantitative easing 2 (QE2)
However, in the Summer of 2010 tension and new expansionary fiscal policies. The swift
returned, mainly as a result of renewed doubts recovery shown by the United States. at the
regarding the European financial sector. The end of the 2009 lost steam at the start of 2010,
authorities reacted with the publication of although growth was maintained throughout
the financial system’s stress tests under a the year, making the final rate close, on average,
scenario that was unlikely but of great impact. to 3% in 2010. This loss of intensity reflected
The results confirmed the good health of the weak private demand as the fiscal stimuli of
European financial system, while the solvency 2008 and 2009 were withdrawn. The result was
problems have been kept well in check. These renewed fears about a double dip recession,
stress tests were particularly demanding in though this scenario has subsequently been
the case of the Spanish financial sector, both ruled out by data and action on economic
in terms of coverage (practically the entire policy. Even so, the recovery is still extremely
system) and the severity of the starting limited due to three factors. First, the gradual
assumptions. They gave added credibility to loss of strength in the real estate market as the
the Bank’s performance in Spain, demonstrated stimulus programs for home buying expired;
the soundness of the system and made it second, the weakness of the labor market; and
clear that it includes some of the most solvent finally, the household deleveraging process,
financial institutions in Europe. These results which is still underway. The United States is
undoubtedly led to the gradual opening relatively isolated at present from pressure in
up of the market and the subsequent asset favor of fiscal consolidation. Nevertheless, the
differentiation. main thrust of economic policy at the end
of 2010 came from the Fed, which initiated a
Towards the end of 2010 tension began to new program of monetary expansion that has
reappear. This time it was the result of very initially led to a downward pressure on interest
Interest rates
(Quarterly and annual averages)
2010 2009
Year 2010 4Q 3Q 2Q 1Q Year 2009 4Q 3Q 2Q 1Q
Official ECB rate 1.00 1.00 1.00 1.00 1.00 1.25 1.00 1.00 1.10 1.92
Euribor 3 months 0.81 1.02 0.87 0.69 0.66 1.22 0.72 0.87 1.31 2.01
Euribor 1 year 1.35 1.52 1.40 1.25 1.22 1.61 1.24 1.34 1.67 2.22
Spain 10-year bond 4.28 4.73 4.23 4.19 3.95 4.02 3.83 3.92 4.16 4.17
USA 10-year bond 3.19 2.86 2.77 3.47 3.70 3.24 3.45 3.50 3.30 2.70
USA Federal rates 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
TIIE (Mexico) 4.91 4.87 4.91 4.94 4.92 5.89 4.93 4.90 5.89 8.00
16 Executive summary
Exchange rates
(Expressed in currency/euro)
Year-end exchange rates Average exchange rates
D% on D% on D% on D% on
31-12-10 31-12-09 31-12-09 31-12-08 2010 2009 2009 2008
Mexican peso 16.5475 14.4 18.9222 1.6 16.7372 12.3 18.7988 (13.3)
U.S. dollar 1.3362 7.8 1.4406 (3.4) 1.3257 5.2 1.3948 5.4
Argentinean peso 5.4851 1.3 5.5571 (11.5) 5.2686 (0.1) 5.2649 (10.6)
Chilean peso 625.39 16.8 730.46 21.3 675.68 15.1 777.60 (1.9)
Colombian peso 2,557.54 15.0 2,941.18 6.3 2,518.89 18.2 2,976.19 (4.0)
Peruvian new sol 3.7528 10.9 4.1626 4.9 3.7448 11.9 4.1905 2.4
Venezuelan bolivar fuerte 5.7385 (46.1) 3.0934 (3.4) 5.6217 (46.7) 2.9950 5.4
On the foreign exchange markets the dollar’s consolidated, although the most probable
The economic
trend was for moderate depreciation against scenario is for some slowdown. The rise in
Asian and Latin American currencies during global GDP could be around 4.4%, barely below
recovery will be
the year. This was interrupted in May due to the figure for 2010. This growth will vary, and in consolidated in
greater risk aversion (the safe-haven effect), most advanced economies it will be subject to 2011, although
but was resumed in June and encouraged risks and uncertainties that have still not been with a certain
after the summer as a result of the anticipation cleared up. Among the advanced economies,
of greater asset purchases by the Fed (QE2). the United States will once again lead the
slowdown.
The euro depreciated significantly against growth table. However, although some factors
the dollar in the first half of the year. It was still limit the growth of private-sector demand
further weakened by the increased tension (the real estate sector, the labor market and
in the European periphery in the second half the deleveraging process) and make it difficult
of the year. In all, as an annual average the for growth to return to something close to its
dollar appreciated 5.2% against the euro. This potential, GDP is still expected to grow at 3%
combination of a weak euro and the strength in 2011. In Europe, although some countries
of the emerging currencies against the dollar have had surprisingly good results (particularly
resulted in a generally favorable performance Germany), a modest growth is expected of
of the currencies with the greatest weight in around 1.7%. The Spanish economy, which
BBVA’s financial statements, with significant was sluggish in 2010, could begin a process of
appreciations in the currencies of Mexico, recovery, but it will still be weak and insufficient
Colombia, Peru and Chile. As a result, the to create jobs. Forecasts suggest a GDP growth
effective exchange rate is positive in a year-on- slightly below 1% (-0.2% in 2010). Progress
year comparison, despite the devaluation of will be strong in emerging economies. Asia,
the Venezuelan bolivar. With respect to with China leading the way, will once more
year-end exchange rates the Venezuelan be the region with the highest growth, which
bolivar depreciated due to the devaluation will remain over 6% for Asia as a whole, and
early on in the year. The other currencies above 9% in China. These figures are very
with an impact on the Group’s balance sheet positive provided that the risks of inflation
appreciated, so their effect is positive on and overheating can be reduced. The recent
balance sheet items and business. In 2011 the strength of Latin America will be maintained,
forecast is for further appreciation of the dollar with a greater contribution from domestic
against the euro, while emerging currencies demand in an environment of favorable
have room for appreciation against the dollar. commodity prices. Growth over 4% is expected
for the region as a whole, and over 4.3% for
With respect to prospects for 2011, the Mexico. Finally, the Turkish economy will
global economic recovery is expected to be continue buoyant in 2011, with a growth of 4.5%.
31.8
The new regulatory framework
27.7
The difficult situation over the last three years has forced the
financial sector to change the rules of the game to make it more
transparent, probably smaller, better regulated and with a more
significant role for the supervisory bodies.
18 Executive summary
45
Macroprudential supervision to adapt to the new regulations. In the specific case of BBVA, the
Group is in a comfortable situation to comply with the new Basel
Macroprudential supervision has become one of the major III regulations and face future crisis scenarios in a more secure
challenges for financial regulation at a global level. It aims to reduce position:
the chance of a collapse of the financial system as a whole by • It is among the best capitalized international institutions thanks
mitigating systemic risk through the combination of existing tools to its quarter-by-quarter organic capital generation.
and newer ones. For example, in Europe the authorities have taken
a major step forward by approving a new financial supervisory • This position has also been strengthened after its recent
framework through the new European Systemic Risk Council successful share capital increase. With this operation, BBVA
(ESRC). Starting on January 1, 2011, the European banking sector will has once more demonstrated its capacity to be proactive;
have a new supervisor, the European Banking Agency, which is in it has anticipated possible future capital increases by other
charge of overseeing compliance with European Union regulations banks designed to ensure compliance with the new solvency
and making progress in harmonizing the national regulatory requirements.
frameworks. The United States has created the Financial Stability • It has a balance sheet with fully known and limited risks.
Oversight Council and Mexico has set up its own Financial Stability
Council. • It has a comfortable liquidity position and adequate leverage,
complying with all regulatory requirements.
Among the important tools for this macroprudential policy are
the stress tests. In July 2010, the Committee of European Banking With respect to the new remuneration framework, both
Supervisors (CEBS) coordinated an exercise using these tests. The governments and regulatory authorities in the countries most
published results were well received by the financial markets very affected by the financial crisis have introduced various measures
positively. They also valued the outstanding robustness of the designed to ensure that the variable remuneration systems are
Spanish sector, with the test covering the 95% of the assets of the adapted to the level of risk assumed. Specifically, within its project to
financial system, and the high level of transparency provided by the modify Directive 48/2006, the European Commission has decided
Bank of Spain, thus enabling the clearest possible discrimination to include all the Financial Stability Board’s (FSB) Principles for
between banks. In the case of BBVA, the publication of the results Sound Compensation Practices. Among the main new points are
of the stress tests confirmed the Group’s strength as one of the that the Bank of Spain will carry out monitoring and supervision
soundest and solvent banks in Europe. The fact that the exercise duties, and sanction those banks that do not comply with the
will be repeated in 2011 is welcomed very positively by BBVA. regulations as approved. The Sustainable Economy bill also
expressly mentions the new requirements regarding the question
of remuneration. Specifically, recommendations are included for
New regulations remuneration policies that are coherent with a prudent and efficient
risk management and that increase transparency and improve
The new regulations to be introduced include a process of corporate governance by imposing greater control on executive
international standardization on a number of fronts, including remuneration. In this respect, it is important to point out that BBVA’s
solvency, liquidity, leverage, transparency and remuneration remuneration system complies with the recommendations of the
policy. The objective is to transform the financial system into one proposed law. Its variable compensation policy for the executive
where business is more secure and recurrent and less procyclical; team, based on a prudent and efficient risk management and
with greater risk coverage and returns better adjusted to the with payments on the short, medium and long term, complies
risks assumed; more solvent and with greater quality of capital, with these requirements. For BBVA, this system represents a
transparency and consistency; and with a better, liquidity position competitive advantage, as it optimizes the relationship between
and less leveraged. value generation in the medium and long term and efficient risk
management.
Basel III basically regulates solvency, liquidity and leverage. With
respect to solvency, financial institutions will have to increase the Finally, another of the fronts on which progress is being made is
quality and quantity of capital they hold according to the risks they the creation of a crisis management and resolution framework
assume in their activity. In addition, a procyclical provision may for global banks when these are no longer solvent. Throughout
be required when there is excessive growth in aggregate lending. 2010, the regulators have taken significant steps through the
New liquidity requirements have been added to these capital reform of Dodd-Frank in the United States, and through a formal
requirements. The aim is to ensure that the banks have sufficient European Commission proposal in Europe, whose final version
cash or equivalent to overcome a very severe short-term scenario, will be published in the spring of 2011. These moves include the
with less severe conditions in the long-term. It also establishes aim to implement tougher capital requirements for systematically
leverage limits. important financial institutions. Currently, BBVA already has most
of the instruments proposed in the regulations approved, thus
All of these measures have an introductory period for their contributing to the stability of the financial systems where it
implementation beginning in 2013 and ending in 2018. The banking operates and also anticipating the regulatory challenges scheduled
industry is thus faced with a few years of major challenges in which for the coming year. Any efficient solution must create the right
20 Executive summary
and the development of new channels for multiple initiatives that are being undertaken
customer convenience with the possibility of in the area.
customization.
• Wholesale Banking & Asset Management
• The leading position of the BBVA franchise in (WB&AM) will continue to enhance its
Mexico will enable it to take full advantage of model across the rest of the areas, based on
the economic recovery and the opportunities globalization, strong customer relations, and
for extending banking penetration in the improved product capacities and innovation.
country. This was the aim of the Strategic The strategic alliance with the CITIC group
Growth Plan 2010-2012 launched this will continue to be strengthened in the Asian
year. This plan will lead to a qualitative region by developing the collaboration
transformation of the business model, service, agreements already in place and searching
commercial efficiency, control and monitoring for new opportunities.
of activity and risk, and thus the Bank’s
profitability as a whole. Mexico is currently A further step was taken in 2010 to diversify
in a position to construct “the bank of the BBVA’s business, in line with the new frame work
future”, with a basic focus on customers and a of global growth, through the agreement to
different way of relating to them. acquire 24.9% of Garanti in Turkey. This gives
BBVA entry into one of the emerging markets
• The South American franchise is also with the greatest growth potential and one of
expected to continue its good performance, the best banking franchises in the country. In
as it has throughout the whole crisis. Regional this respect, it is worth noting the good earnings
leadership in this area must be used to figures reported by the Bank for 2010, with a net
reinforce the local positioning of each bank attributable profit up 6% year-on-year to all-time
within each country. The management high. The driving force of growth continues to
priorities for 2011 will be focused on the be the excellent performance of the lending
customer base (new customers, growth, business, which was up 31%, even though asset
loyalty and market share), the progress with quality was not negatively affected. In fact, the
the customer insight and business intelligence NPA ratio and risk premium improved over the
models, increased commercial productivity, year. Garanti strengthens the business portfolio
maintenance of efficiency in the pension and BBVA’s growth profile. Similarly, Garanti
business and continued development benefits from BBVA’s experience in market and
and improvement of a multi-channel product development. In other words, BBVA’s
approach. Growth will also be based on both experience of similar successful deals concluded
technological and management innovation. in other markets (above all, Latin America) gives
it the capacity to boost Garanti’s growth in the
• The United States. This is one of the Group’s future.
strategic markets. Deployment of BBVA’s
business model and technological platform is
being steadily extended in this area, with clear BBVA always focuses on its
operational improvements every quarter. As a customers
result, the weight of the relative contribution
of this franchise will gradually increase. A These times of uncertainty and change demand
differentiation plan will be implemented in 2011 that all financial institutions that hope to prevail
that is capable of supplying the products and be readily able to adapt. But this environment
services required for the needs of the Bank’s also represents a great opportunity for BBVA. It
different customers through the appropriate has implemented numerous proactive plans and
channels. And, of course, technology will play initiatives to ensure transformation and growth.
an important role in all of this. But at least one thing will remain unchanged: our
commitment to our customers and the society
• China and Asia. The results in terms of in which we operate. Our aim is to support them
earnings and the Bank’s commitment to the even in the most difficult circumstances. This
region have begun to register in 2010. In the appears simple, but today it is only within the
medium term the contribution of this area is reach of a few banks. At BBVA we are proud to be
expected to increase even more thanks to the one of these few.
–5.5% –8.0%
Net attributable profit
–9.0%
Key ratios Efficiency NPA
39.0% 5.0%
Coverage Risk premium
46% 0.6%
22 Executive summary
The key in 2010:
Increased market share and differential
performance throughout the income statement.
Increased market share in key products for customer loyalty: residential mortgages and
customer deposits.
Positive trend of risk indicators, as a result of the proactive measures taken in 2009.
“Plan Uno” launch, which has been a very important step in the area’s commercial
strategy.
+0.5% –3.4%
Net attributable profit
+11.9%
Key ratios Efficiency NPA
34.6% 3.2%
Coverage Risk premium
152% 3.6%
24 Executive summary
The key in 2010:
Upward trend in earnings. Improvement in
business activity and risk indicators.
Significant recovery in business activity.
Sound liquidity and capital management, with the largest-ever subordinate debt issue on
international markets by a Mexican bank.
Numerous prizes and awards. Information Week magazine names BBVA Bancomer one
of country’s most innovative companies, and Latin Finance nominates it the Best Bank in
Mexico. Seguros BBVA Bancomer is chosen as best insurance company in Mexico by World
Finance.
+9.7% +6.4%
Net attributable profit
+16.5%
Key ratios Efficiency NPA
43.9% 2.5%
Coverage Risk premium
130% 1.5%
26 Executive summary
The key in 2010:
Excellent performance throughout the crisis in
earnings, business activity and risks.
Strong business activity.
Cost moderation.
Numerous prizes and awards, including: Banco Continental and Banco Provincial were
considered by Global Finance as the best banks in Peru and Venezuela. BBVA Colombia was
recognized as the “Bank of the Year” in the country by The Banker. It also received an award
as the best Colombian bank for good corporate governance practices, social responsibility
and ethics from Latin Finance. And Euromoney named BBVA Paraguay as the “Best Bank” in
the country for the fourth year in a row.
+0.1% –7.0%
Net attributable profit
+116.8%
Key ratios Efficiency NPA
59.6% 4.4%
Coverage Risk premium
61% 1.7%
28 Executive summary
The key in 2010:
Implementation of the BBVA business model.
Across-the-board indicator improvement.
Gradual change in the mix of the loan-book towards lower-risk portfolios and greater
customer loyalty.
Positive performance in the most recurrent revenues: net interest income and fee income.
The incorporation of the WB&AM business carried out in the country is yet another step in
the construction of the US franchise.
BBVA Compass becomes the sponsor of the world’s most important basketball league, the
NBA.
+3.4% +3.5%
Net attributable profit
+11.4%
Key ratios Efficiency NPA
28.5% 1.2%
Coverage Risk premium
71% 0.3%
30 Executive summary
The key in 2010:
Quality of revenues, strengthening of the
customer franchise and growing contribution
of Asia.
BBVA consolidates its position as one of the key banks at a global level in a number of
investment banking products.
Numerous prizes and awards, including the nine “Deal of the Year” awards from The Banker
magazine to C&IB.
Signing of an agreement with Bank of Baroda for the creation of a credit card company in
India.
Completion of the Transformation Plan, based on four pillars: globalization, closer relations
with the customer, added-value product and service development and risk discipline.
4.3
4.1 1.5
57
Coverage
ratio
4,5
4,0 4,5
3,5 4,0
3,0 3,5
2,5 3,0
2,0 2,5
1,5 2,0
1,0 1,5
Recoveries 0,5 Net entries 1,0
(Million euros) 0,0 (Million euros) 0,5
0,0
+39% –61%
10,740
2,461
Anticipation
—50%
9,063
6,524 8,279
4,144
10000
32 Executive
Resumensummary
ejecutivo
9000
8000 12000
7000
The key in 2010:
BBVA has improved and stabilized its main
indicators of credit quality
Significant progress over the year in improving portfolio credit quality: growth in lower-risk
segments and reduction of more problematic portfolios in all geographical areas.
Stability in outstanding NPA following the anticipatory provisions made at year-end 2009.
The NPA ratio has remained under control throughout the year, and has not exceeded the
peak of December 2009.
The risk premium was down in 2010 on the figure for 2009. Nevertheless, the coverage ratio
is still improving steadily from its low in December 2009.
By business area:
• South America and WB&AM are maintaining their NPA ratio in check and at historically
low levels.
• Spain and Portugal and the United States have managed to stabilize their indicators after
several years of deterioration following the 2007 crisis.
The development of human capital is a basic giving them the opportunity for professional
Human capital: element of the 21st century, where employee development and promoting management styles
knowledge, skills and abilities are the main tools that encourage the sense of belonging to the
a key tool for for creating business value. One key to the Group, the maximum expression of the “team.”
a company’s success of BBVA is without doubt the men and
success. women who make up its human resources. The
professionalism of the almost 107,000 people
At BBVA we have always
in 31 countries make it possible for the Group’s
different franchises to occupy leading positions believed that business
in practically all of the markets where it operates. education is a critical
Not only people, but teamwork and development competitive advantage.
of leadership are critical pillars in the Bank’s
culture of Human Resources, as BBVA considers
that the result obtained as a team is greater than This is why we have made professional
the sum of individual efforts. All of the measures development our hallmark. In a knowledge-based
taken within our Group are determined by a economy, what differentiates organizations is
common interest: to boost our teams in all of their vision of the future and their capacity to
their dimensions by selecting the best candidates, create it by using the human factor.
34 Executive summary
Throughout 2010, the Human Resources area has Selection
continued to work on two major lines of action: The active online
customer focus, considering customers in their Our experience is basically focused on networks
broadest sense, from the individuals to the areas
presence of the
of global scope to extend our employer branding,
in the Group; and technological infrastructure, together with others that support the search
Selection unit
with the aim of strengthening the advantage for candidates. BBVA also has its own selection provides BBVA
represented by a more global and integrated portal, called Campus Virtual de Empleo BBVA with a new
management of the function. Aspects such as
selection, training and development are clear
(BBVA Virtual Employment Campus). relationship model
examples of the combination of these two lines The Campus gives us global positioning, while at
in the recruitment
of action. the same time providing coverage for each and process, in line
with new trends.
The team 35
every one of the different units. Each country has In terms of the selection process, a series of tests
its own stand that presents the job offers available identifies the candidates’ potential against the
at any time; and candidates may upload their CVs requirements defined by the Organization and
online. the degree to which they fit BBVA’s corporate
culture. Although the process varies according
All of our channels are also connected to our to the type of candidate (recent graduate,
CV management system, so that all the CVs with previous experience, senior, etc.), equal
are incorporated into a single database, thus opportunity is guaranteed through standard
optimizing working time for both recruiters and tests. This model is aligned and consistent with
candidates. internal assessment schemes, thus allowing
the candidates who enter to have an initial
CVs New competencies assessment that is comparable to
received hires
that given to the rest of the Group’s employees.
2010 240,409 10,569
This method helps focus their professional
2009 234,720 8,263
development from their first day with the Group.
Technology usage
36 Executive summary
Training is the reflection of the Group’s commitment
to the development of its professionals.
The team 37
Development with the task of proposing and supporting the
Talent implementation of initiatives, as well as monitoring
management is Our highly developed human resources policies, the Group’s position on this issue.
processes and tools allow us to identify the
a crucial element
available internal talent considered critical to Technology is not only an important part of the
in BBVA. the Group and manage it selectively. In addition, selection, training and development processes;
most of the internal recruitment processes have it also enables people to work within new
been published through the “apúntate” platform, mobility and flexibility schemes. Throughout
BBVA’s job posting tool, in order to guarantee that 2010 different types of distance working have
the best professionals occupy the most important been tried as a means of making progress in
functions and to boost transparency and the search for new models that provide a better
objectivity in team development and promotion. reconciliation of the needs of the Organization
and individuals. Technology also enables a global
BBVA also aims to eliminate all barriers to the and uniform introduction of other processes
professional development of women in the Group. within the Group, such as “performance
To this end, in 2010 continued to make progress evaluation” and “skills management.” But the use
in the gender diversity project to ensure that of technology to provide a better service to the
the best professionals fill the most important employee is also evident in the deployment of
positions in each of the different areas, units and employee care services (SAE), which combine
geographical areas. Given the importance of this various channels (call center, email, portals, etc.)
project, a strategic committee has been set up to provide a swift response to any query from
the staff related to human resources policies
and processes. Currently, more than 95% of the
BBVA Group. Satisfaction survey BBVA team can take advantage of this personal
2010 results services channel.
100
90
80
70
60
50
40
30
20
10
38 0 Executive summary
The BBVA brand
40 Executive summary
Brand management score
During 2010, brand
management in
97 97
93 93 BBVA has been
75
very highly valued
by experts.
55
BBVA
36 38
32
Sector 24
average
brand score in 2010, continuing another year well brand is perceived in the principal countries in
above the average in its sector. which the Group operates. The perception of the
BBVA brand has stabilized or improved in most
One of the aspects most highly valued by experts countries in terms of reputation and continues
is precisely having the homogenous measurement to be considered a solid brand in all countries in
tools available that enable monitoring of how the which the Group is present.
BBVA brand awareness
(1-100)
Spain Mexico Argentina Chile Peru Colombia Venezuela United States
2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010
Awareness 66.1 68.3 89.0 86.0 65.0 71.0 20.0 21.0 70.0 77.0 33.0 31.0 44.0 49.0 n.a. n.a.
Awareness
(rank) 1st 1st 1st 1st 2nd 3rd 5th 5th 2nd 2nd 4th 4th 3rd 3rd n.a. n.a.
Reputation with
customers 73.6 72.2 67.5 66.9 73.6 72.5 71.2 70.9 71.0 74.5 61.6 66.1 71.0 73.7 68.9 73.2
Notes:
Reputation data from February to September 2010.
The data for awareness in 2010 are for the January-September period in all countries except Spain, where they run through to July, and Chile, data collected between July and August.
A variation between two years is only statistically significant when it is greater than or equal to 2.
Awareness data source: Advance Tracking Programme, MillwardBrown.
Reputation data source: RepTrack, Reputation Institute.
The aim of BBVA’s Corporate Responsibility policy continues to “working for a better future for people” and its principles, which
be to define and promote behavior that creates value for all of its should respond in the best possible way to the expectations of
stakeholders (social value), as well as for BBVA itself (reputational stakeholders (customers, employees, shareholders, suppliers and
value and direct economic value). It is essential that such society) while reinforcing the Bank’s business strategy.
commitment and behavior should express both BBVA’s vision of
Compliance
objectives 2010
Subjects Main CR objectives in 2010 verified by Deloitte Objectives for 2011
CR principles and policies Make two appearances before the Board of Report regularly (at least once a year) to the Board of
Directors. 50% Directors.
Stakeholders Making of a roadshow by CR with sustainability 50% Include CR-ESG (environmental, social and governance)
analysts. issues in Investors Day 2011.
Promote social projects with involvement of 50% Create an internal ESG Committee with members from
shareholders and/or customers. Investor Relations (IR), CR and Corporate Governance.
Financial Literacy “Valores de futuro” in Spain: reach 550,000 Exceed a total of one million beneficiaries of the Global
children and 2,800 participating centers. Financial Education Plan and conclude an agreement with
Launch of “Valores de futuro” in Portugal, with PISA to promote financial literacy.
100,000 children taking part. Consolidate the figures of centers and beneficiaries of the
Implementation of the “Adelante con tu futuro” “Valores de futuro” program in the 2010-2011 academic year
(Forward with your future) program in countries (in Spain 578,000 students and 3,060 centers, and in
in South America. Portugal 100,000 students and 600 centers).
“Adelante con tu futuro” in Mexico: reach 100% Reach a total of 400,000 beneficiaries of the program
240,000 beneficiaries. “Adelante con tu futuro” in Mexico.
Financial inclusion Operational presence of the BBVA Microfinance Extend the BBVA Microfinance Foundation’s current
Foundation in Argentina, Mexico and Central customer base of 620,000 by 20%.
America. Extend the operational presence of the Microfinance
50% Foundation from the current 6 countries (Argentina, Chile,
Colombia, Panama, Peru and Puerto Rico) to 9.
Customer focus Define and implement a new procedure to Approve a corporate manual for transparent, clear and
increase the transparency and clear language responsible (TCR) communication and design local
used in the Group’s advertising campaigns. 25% implementation plans.
Responsible finance Implementation of ecorating in CBB Spain, Include mitigating factors for companies with high
Mexico and Peru. environmental risk and exposure of over €500,000 in
25% ecorating analysis.
Implement ecorating in Mexico.
Human resources Launch of the “Diversity and Equality” course on Boost initiatives that promote equal opportunity, the life/
the e-campus platform (Spain). work balance and gender diversity, and the extension of
100% the genera! social networking diversity tool throughout
the Group.
Responsible investment Progress in the engagement process and the Analyze the possibility of extending the exercise of
exercise of voting rights. 50% voting rights to other geographical areas (currently only
in Spain).
Responsible procurement Approval and implementation of the sustainable 0% Approve and begin to implement the sustainable
purchasing policy. purchasing policy in the Group.
Environment Increase the number of employees working in 100% Increase the number of employees working in ISO 14001
ISO 14001 buildings to 15,635. buildings by 20%.
Community involvement Consolidate the “Niños adelante” program and the Consolidate the number of 60,000 children who benefit
number of children with scholarships: 60,000. from the “Niños adelante” scholarships.
100% Launch a global BBVA program to support social
entrepreneurs.
Note: This table only includes some of the main objectives. The complete list is available at www.bancaparatodos.com.
42 Executive summary
BBVA is working to extend integration of strategic management of In 2010 the Group has continued to make progress with actions
environmental, social, ethical and corporate governance variables based on the pillars of the Strategic Corporate Responsibility and
across all of its areas of business. The aim of this is to reduce extra- Reputation (CRR) Plan: financial literacy and inclusion, responsible
financial risks, increase business opportunities by working on the banking and community involvement. The following table sums up
most important issues for society, and to work together to solve both the level of achievement of these objectives for 2010 and the
social demands through increased dialogue and commitment to management priorities set for 2011 for each of the Group’s basic areas
stakeholders. The following table of key indicators sums up the of action. It is important to highlight that the accompanying data for
cross-cutting nature of the concept of Corporate Responsibility in its 2010 has been verified by Deloitte.
key metrics. These metrics are developed in more detail in Chapter V
of this Report.
Corporate responsibility 43
46 Earnings
56 Balance sheet and business activity
63 Capital base
66 The BBVA share
Group
financial
information
“They had Juan became a regular customer at Julia’s
bakery on the day he arrived in Barcelona from
already met in a his home town of Santiago, Chile. But they had
already met in a BBVA branch. He was opening
BBVA branch” his first bank account in Spain, she was asking for
a loan to refurbish her premises. Julia helped him
to a “soft landing” in the city and he returned the
favor by helping with her refurbishment work. He
has not paid for his croissants for some time now.
45
Earnings
In 2010 BBVA generated a net attributable • Elevated capacity for generating revenues,
profit of €4,606m, an increase of 9.4% on the as reflected by the accumulated gross
figure for 2009. income, the highest in BBVA’s history,
of €20,910m. This is especially relevant
The following are earnings highlights for the considering the still complex economic
year: backdrop of the year.
Earnings 47
• Launch of an ambitious investment plan BBVA’s profitability compares favorably with
with the objective of initiating a new path standards in the sector. The Group maintains
of growth in each of the markets in which an outstanding position in terms of average
BBVA operates. The above has impacted the total assets (ATA) with respect to the main
course of operating expenses (up 7.3% items on the income statement. Thus the net
year-on-year, but up 5.4% at constant interest income over ATA stands at 2.38%,
exchange rates). which though below the figure in 2009 is
above the 2.26% in 2008. The main causes
• Positive progress of provisions. After the of this development, apart from the growth
anticipatory provisions made in the fourth of 2.9% in ATA (mainly due to the general
quarter of 2009, the impairment losses on appreciation of exchange rates), are the
financial assets in 2010 fell by 13.8% as a restriction of the net interest income caused
result of BBVA’s superior risk management. by the rise in interest rates, more expensive
It is also worth noting that the NPA ratio and wholesale funds, and the steady change in
the coverage ratio improved over the year the composition of the portfolio, as explained
to 4.1% and 62%, respectively (from 4.3% and below. However, the greater contribution of
57% at the close of December 2009). net trading income (NTI) and the other gains/
losses items has reduced the gap between
• General appreciation in currencies with the 2010 and 2009 in terms of gross income
biggest impact on the Group’s earnings. The over ATA (3.74% in 2010 compared with 3.81%
exceptions are the Venezuelan bolivar, which in 2009). Increased lending over the year
devalued in January, and the Argentinean has reduced the operating income over ATA
peso, which depreciated slightly over the last by 13 basis points to 2.14% (also above the
twelve months in terms of average exchange 2008 figure). Finally, the positive trend in
rates. In all, the effect of the exchange rates loan-loss provisions and provisions (net) and
on the year-on-year comparison of the other gains/losses explains why ROA stood at
Group’s income statements and balance 0.89% (0.85% in 2009).
sheet is positive.
Earnings 49
In South America, the reactivation of activity
3 has compensated for the effect the heightened
competitive pressure in the region has had on
spreads. The net interest income of €2,495m
is up 11.1% over the levels of 2009 at constant
exchange rates.
Finally, in the United States, the accumulated
net interest income was up 1.3% year-on-year
(up 6.8% including the effect of the currency),
and was sustained primarily by the repricing
efforts carried out in the year and due to the
growth of lower-cost customer funds. The
customer spread of BBVA Compass increased
by 16 basis points over the year, as the rate paid
on customer deposits has fallen less than the
yield on loans.
8,967
8,455 8,358 +7.3% (1)
Earnings 51
anticipated the sector’s current trend with its
6
aforementioned Transformation Plan. As of
31-Dec-2010 there were 105 branches fewer
than at the close of 2009.
7 8
Breakdown of operating costs and efficiency calculation
(Million euros)
2010 Δ% 2009 2008
Personnel expenses 4,814 3.5 4,651 4,716
Wages and salaries 3,740 3.7 3,607 3,593
Employee welfare expenses 689 7.1 643 693
Training expenses and other 386 (3.7) 401 430
General and administrative expenses 3,392
12.7 3,011 3,040
Premises 750 16.7 643 617
IT 563 (2.4) 577 598
Communications 284 11.6 254 260
Advertising and publicity 345 31.9 262 272
Corporate expenses 89 11.6 80 110
Other expenses 1,040 11.9 929 887
Levies and taxes 322 20.7 266 295
Administration costs 8,207 7.1 7,662 7,756
Depreciation and amortization 761 9.2 697 699
Operating costs 8,967 7.3 8,358 8,455
Gross income 20,910 1.2 20,666 18,978
Efficiency ratio (Operating costs/gross income, in %) 42.9 40.4 44.6
20,666 20,910
18,978
Gross 44.6
income 42.9
40.4
Operating
cost
10
Operating income 11
Provisions
and
others assets
Impairment losses on financial
12
In 2010, impairment losses on financial assets,
€4,718m, positively progressed and were down 5,473
13.8% compared to 2009. The above has
4,718 Ð13.8% (1)
premium for the period to
enabled the risk
continue its downward
trend and closed at 1.3%
(1.5% in 2009). The cause of this decrease is
2,940
primarily due to the proactive measures carried
out throughout the fourth quarter of 2009 in
Spain and Portugal and in the United States.
Considering the above, the percentage of the
operating income allocated to covering these
impairment losses stands at 39.5%, one of the
2008 2009 2010
lowest for its reference group. Finally, said fall
in provisions did not prevent the improvement
Earnings 53
in the coverage ratio, which stood at 62% as to these capital gains, in 2009 they mainly
of 31-Dec-2010, up by more than 4 percentage included the goodwill impairment charge in the
points compared to year-end 2009. United States.
8.1
6.7
54 Group financial information
Economic profit business with customers, and hence the truly
manageable component in these metrics.
Earnings 55
Balance sheet and
business activity
The main aspects of the BBVA Group balance • Customer deposits performed strongly,
sheet and business in 2010 are: due to the increase in time deposits in
the domestic sector and low-cost funds
• The loan book varied in the geographical in the non-domestic sector. In both cases,
areas where BBVA operates. Thus, in Spain the most notable aspect is the effort to
and Portugal its performance was positive, strengthen customer loyalty.
with a year-on-year growth of 0.7%, in
a context of a general credit slump. In • The leading position in pension funds in
contrast, Mexico and South America have Spain and most of the Americas has been
been extremely buoyant, with very positive maintained.
rates of growth over the year (+10.2% and
+21.5% respectively). In the United States, • Continuing stability in the Group’s balance
the fall has been the result of the gradual sheet. Total assets at the end of December
change in the portfolio mix towards lines were similar to the figure for 31-Dec-2009
with lower associated risk. (+3.3% or +1.2% at constant exchange
rates). In addition, the Bank’s balance
• Positive performance in residential sheet is characterized by great strength
mortgages in practically all the in the indicators of risk, solvency and
geographical areas and in loans to major liquidity and its adequate financing
corporations and companies in the structure. To date, the Group meets all the
Americas. requirements set by regulations in this
respect.
874 +3.9% (2)
838 841
56
Group financial information
• The main items in assets and liabilities are devaluation in January 2010. We have
well known to the Group, as they have included rates of change at constant
been generated by the Bank itself from the exchange rates for the most important
portfolios of its customers, about whom it data in order to help the analysis of the
has detailed information based on long-term business activity.
relationships.
The main item on the asset side of the
• Positive effect of the exchange rate, since balance sheet is lending to customers,
the currencies with the greatest impact which represented 61.3% of total assets as of
on the Bank’s balance sheet and December 31, 2010, compared with 60.4% a
activity have appreciated, except for year earlier. On the liabilities side, customer
the Venezuelan bolivar, owing to the deposits also increased to 49.9% of the total
Lending to 343
332
348 +4.8% (1)
customers
Gross lending to customers stood at €348
billion as of December 31, 2010, a year-on-year
increase of 4.8%. Excluding the exchange-rate
effect, the increase is a year-on-year 2.8%.
Customer lending
(Million euros)
31-12-10 Δ% 31-12-09 31-12-08
Domestic sector 209,587 2.4 204,671 210,082
Public sector 23,767 14.3 20,786 17,599
Other domestic sectors 185,819 1.1 183,886 192,483
Secured loans 105,002 (1.2) 106,294 105,832
Commercial loans 6,847 (3.0) 7,062 9,543
Financial leases 5,666 (13.5) 6,547 7,702
Other term loans 46,225 (0.4) 46,407 55,448
Credit card debtors 1,695 (7.8) 1,839 1,971
Other demand and miscellaneous debtors 2,222 (3.2) 2,296 3,474
Other financial assets 7,321 189.4 2,529 3,031
Non-performing loans 10,841 (0.6) 10,911 5,483
Non-domestic sector 138,666 8.8 127,491 132,600
Secured loans 45,509 7.6 42,280 39,390
Other loans 88,750 9.6 80,986 90,335
Non-performing loans 4,408 4.3 4,225 2,875
Customer lending (gross) 348,253 4.8 332,162 342,682
Loan-loss provisions (9,396) 7.8 (8,720) (7,423)
Total customer lending (net) 338,857 4.8 323,441 335,260
Broken down by domestic and non-domestic
sectors, among loans to domestic customers,
lending to the public sector increased by
14.3% year-on-year to €24 billion. Loans to
other residential sectors (ORS) increased by
1.1% in the same period. Out of this segment,
the item with the lowest associated risk
and greatest relative weight is secured
loans, which totaled 56.5% of ORS loans,
€105 billion. The items more related to the Customer funds
activity of companies and businesses and
with consumption fell back less than in the As of December 31, 2010, total
customer funds
previous year. Commercial loans, which
came to €526 billion, an increase of 3.3% on
basically include discounted bills, fell by 3.0% last year’s figure. Excluding the exchange-rate
(–26.0% in 2009). Other term loans, which effect, the increase is 0.1% year-on-year.
include consumer finance and corporate and
business lending, fell by 0.4% (–16.3% in the The item that is performing best is on-
previous year). Finally, non-performing assets balance sheet customer funds, which
remain under €11 billion at the close of the amounted to €378 billion, a year-on-year
year, and have fallen for the first time for more growth of 1.7%. This improvement is based,
than two years (–0.6% year-on-year). once more, on the strength of customer
deposits (+8.5% year-on-year to €276
Lending to non-domestic customers totaled billion). In the domestic sector, there was an
€139 billion as of 31-Dec-2010, a year-on-year outstanding performance in time deposits
increase of 8.8%. The other loans heading (+€14 billion over the year), with an increase
grew by 9.6% over the year to €89 billion, and of 39.9%, although this represented a
secured loans increased 7.6% to €46 billion. slowdown on its growth in the last part of
Finally, non-performing assets grew 4.3% owing the year (+3.3% since September 2010).
to the exchange-rate effect. Not counting this, With respect to non-domestic deposits,
the decrease was 4.2% over the same period. the greatest increase over 2010 as a whole
amounted to €148 billion at the close of 2010,
7.6% up on the figure for 31-Dec-2009 (+0.5% at
constant exchange rates). In Spain, the figure
is €54 billion, a fall of 14.8% year-on-year. Of
these, mutual funds amount to €24 billion and
their 28.0% fall is the result of savers showing
greater preference for other products such as
time deposits, as well as the negative effect of
the stock market prices on managed funds.
The biggest falls continued to be in funds with
lowest added value (guaranteed, short-term
fixed-income, money-market and long-term
fixed-income). Pension funds have performed
better. They only fell back by 2.1% year-on-year
was once more in the items with lowest to €17 billion. Thus, BBVA maintains its leading
associated cost, such as current and savings position as pension fund manager in Spain,
accounts (+17.2% year-on-year). In contrast, with a market share of 18.3%. Finally, customer
time deposits continue to decrease (–30.1% portfolios increased by 2.1% on the previous
year-on-year). year to €13 billion.
The performance of Group’s customer lending Off-balance-sheet funds in the rest of the
and deposits has kept the customer deposit/ world totaled €94 billion, 26.8% above the
60 Group financial information
Other customer funds
(Million euros)
31-12-10 Δ% 31-12-09 31-12-08
Spain 53,874 (14.7) 63,194 61,622
Mutual funds 23,708 (28.0) 32,945 34,894
Mutual funds (ex real estate) 22,202 (29.2) 31,365 33,191
Guaranteed 11,773 (8.0) 12,799 16,500
Monetary and short-term fixed-income 6,040 (54.8) 13,374 11,611
Long-term fixed-income 698 (21.4) 888 1,057
Balanced 974 14.6 850 731
Equity 1,513 10.0 1,375 1,188
Others (1) 1,204 (42.1) 2,078 2,104
Real estate investment trusts 1,392 (5.5) 1,473 1,580
Private equity funds 114 5.7 108 123
Pension funds 16,811 (2.1) 17,175 16,078
Individual pension plans 9,647 (3.4) 9,983 9,358
Corporate pension funds 7,164 (0.4) 7,191 6,720
Customer portfolios 13,355 2.1 13,074 10,650
Rest of the world 93,698 26.8 73,911 57,406
Mutual funds and investment companies 19,675 36.0 14,469 11,395
Pension funds 61,944 34.6 46,014 32,079
Customer portfolios 12,080 (10.0) 13,427 13,932
Other customer funds 147,572 7.6 137,105 119,028
(1) Including absolute return and passive management funds.
22
In 2010, the ability to generate capital low level of capital issues, given the difficulties
continued to be a crucial factor for the financial in the financial markets, affected by tensions
sector, as is made clear by tests undertaken by caused basically by uncertainties on the
a number of bodies such as the Committee of sustainability of public finances in some
European Banking Supervisors (CEBS) to check European countries. On the other hand, in
the capital adequacy of banks under situations 2010 the Basel Committee also issued several
of stress. The results of the stress tests carried consultation documents relating to the new
out by the CEBS were published in July. They Basel III regulations. There are still some
revealed that BBVA is among the best banks uncertainties about the characteristics that
in Europe, with not only an excellent capital will be required of capital instruments to be
adequacy level but also the capacity to face considered as Tier I capital under Basel III.
situations of maximum stress in a time horizon
of two years. Given this situation, it is important to stress
that BBVA has organically generated capital
The year 2010 was characterized by two quarter by quarter. What is more, the Group’s
factors. On the one hand, it was a year with a capital base as of December 31, 2010 has
Capital base 63
been strengthened by the successful share currency appreciation. With these RWA, the
capital increase of €4,914m in November capital requirements (8% of RWA) stand at
2010 to finance the acquisition of a 24.9% €25,066 million. Thus, there is a capital base
stake in Garanti planned for the first half surplus of €17,858 million, 71.2% above the
of 2011. minimum required, which reflects the Group’s
sound position.
BBVA closed 2010 with a net attributable
profit of €4,606m, of which €1,079m were Core capital at the year-end stood at €30,097
distributed to shareholders in cash through million. The core ratio was 9.6%, up 164 basis
three interim dividend payments amounting points, of which approximately 70 correspond
to €0.27 per share. Retained earnings in 2010 to organic capital generation and 150 are
were €3,527m, with an organic generation of from the aforementioned capital increase. Of
core capital that has more than offset ordinary this amount, 60 basis points are basically the
expenses and extraordinary net investments result of the exchange-rate effect (including the
during the year. devaluation of the Venezuelan bolivar) and the
exercise of the purchase option on CNCB. It is
In terms of expenses, it is important to important to note that including the effect of
remember the negative effect of the Garanti’s acquisition in a pro-forma basis, this
devaluation of the Venezuelan bolivar in core ratio would be 8.6%.
January 2010. With regard to investments,
the Group has continued its expansion plan If preference shares are incorporated into the
in Asia. In the second quarter, it exercised core capital, Tier I increases to €33,023m, 10.5%
its purchase option for 4.93% of CNCB to of RWA, compared with 9.4% in the previous
increase its stake to 15%. The total amount of year. The amount of these preference shares
investment as a result of the exercise of this closed the year at €5,164m. They account for
option was about €1,200 million. This has had 15.6% of bank capital (Tier I), compared with
a negative impact of 20 basis points on the 18.8% the previous year.
core capital, due to the goodwill generated of
around €600 million. Tier II capital, which includes mainly
subordinated debt, eligible unrealized
As a result of all the above, as of December capital gains and surplus generic insolvency
31, 2010, the eligible capital of BBVA, provisions, closed the year at €9,901m. This
calculated according to the Basel II capital amounts to 3.2% of RWA, 100 basis points
agreement rules, was €42,924 million, €3,484 below the figure for 2009. This ratio has
million more than on 31-Dec-2009. Over the fallen basically due to the lower unrealized
year the RWA increased by 7.7% to €313,327 gains and the increased deduction for the
million, 56.7% of the Group’s total assets. purchase option on CNCB. It is important to
This increase is largely the result of general note that BBVA Bancomer completed a USD
23 24
64 Group financial information
1,000 million subordinated debt issue and
BBVA Chile one for 5.6 million Unidades de Core capital ratio 25
Fomento (€180m). Both issues are calculated
as Tier II in the Group’s capital base and have
9.6
a positive impact on supplementary bank
8.6
capital. 8.0
Ratings
Long term Short term Financial strength Outlook
Moody’s Aa2 P-1 B– Negative
Fitch AA– F-1+ B Stable
Standard & Poor’s AA A-1+ - Negative
Capital base 65
The BBVA share
Against the background of a global economic in Mexico and South America, as well as the
recovery in 2010, stock markets around recovery of business activity and earnings in
the world have performed variably, in part Latin America.
reflecting the different economic performance
in different regions. Thus, the S&P 500 index Analysts have also positively valued the
in the United States was up 12.8%, the Stoxx 50 announcement of the acquisition of 24.9%
in Europe closed the year at the same level as of the Turkish bank Garanti. The main
at the end of 2009 (+0.04%), the FTSE in the highlighted elements were the quality of
United Kingdom was up 10.9%, and in Spain the the Turkish franchise and the future growth
Ibex 35 was down 17.4%. potential both of the country and the bank.
The share capital increase undertaken has
Uncertainty about the future of some been well received by the market, as it was
The banking sector economies in the Eurozone and concerns backed by 99.9% of the Bank’s shareholders
regarding capital and liquidity levels of existing prior to the operation. The issue
has been penalized banking institutions have been key elements was over-subscribed by over a factor of four.
compared with the in this behavior. However, in the second half The main highlights of this operation are the
main stock market of the year, two factors have mitigated falls Group’s improvement in solvency ratios and
in the stock markets in the banking sector. the ability of BBVA to anticipate, taking the
indices, particularly First, the publication of the stress tests of lead in possible future capital increases by
in Europe. European banks, which were favorably other banks before the implementation of
accepted due to their implicit exercise in Basel III.
transparency, particularly in the case of Spain.
Second, the confirmation of the delay in the
possible end of the injection of liquidity by BBVA is trading at a very
the European Central Bank (ECB). However, attractive discount as
the aggravation of problems in some
European countries, particularly Ireland,
compared to the sector.
revived tensions in the markets towards the
end of the year.
BBVA shares in 2010 have been penalized
Thus, the Stoxx Banks and Euro-Stoxx Banks basically by investors’ concerns about Spain’s
indices in Europe fell by 11.6% and 26.9% macroeconomic situation. In the first half of
respectively, while the FTSE Banks index the year, the share price fell by 32.3%. However,
(United Kingdom) remained practically flat the publication of the stress tests for European
(–0.1%). In the United States, the S&P Financials banks confirmed the financial strength of
Index and the S&P Regional Banks index were the BBVA Group. In the third quarter of the
up 10.8% and 27.4% respectively. year, BBVA gained 15.0% in its share price and
outperformed the Ibex 35. Also, market tension
The BBVA earnings figures presented in the fourth quarter had a negative influence
over 2010 have, in general, been favorably on the final price of the shares. Overall, the
received by analysts. Particular value has been share price varied between €7.00 and €13.27,
placed on the confirmation of the Group’s closing at €7.56 per share on 31-Dec-2010,
improvement in asset quality, both in Spain and giving a market capitalization of €33,951m.
28 Market capitalization
64,788
62,816
51,134
47,712
Ð28.8%
32,457 33,951
Capital ownership remains very diversified. capital. It is worth highlighting that in 2010
At the close of 2010, the number of BBVA shareholder dispersion was maintained, as of
shareholders stood at 952,618, compared December 92.7% held fewer than
with 884,373 on 31-Dec-2009, a 7.7% increase. 4,500 shares (compared with 93.8% as of
The only significant individual holding that December 31, 2009), representing 12.6%
Capital ownership BBVA is aware of is that of the company of the share capital (compared with 12.5%
remains very Inveravante Inversiones Universales, which as as of December 31, 2009) and an average
diversified. of December 31, 2010 held 5.07% of the share investment per shareholder of 4,714 shares
(4,238 in 2009).
difficult environment.
As in 2009, the shares are traded on the
continuous market in Spain, on the New York
Stock Exchange (as ADSs represented by
€
€
ADRs) and also on the London and Mexico
stock markets.
Shareholder structure
(31-12-2010)
Shareholders Shares
30
BBVA shares continue to have a notably high Finally, BBVA shares are included in the key
level of liquidity. They have traded on each of Ibex 35 and Euro Stoxx 50 indices, with a
the 256 days in the stock market year of 2010. weighting of 9,5% in the former and 2,2%
A total of 17,459 million shares were traded in the latter, as well as in several banking
on the stock exchange in this period, 388.8% industry indices, most notably the Stoxx
of the share capital. Thus the daily average Banks, with a weighting of 10,0%. BBVA is also
volume of traded shares was 68 million, 1.5% of present in the market’s leading sustainability
the share capital and an effective daily average indices, such as DowJones and MSCI
of €655m. Sustainability Indexes.
Risk
management
“There was no Eva wanted to live in the city; Tom preferred
the countryside. The city won. Tom suggested
71
Global Risk Management:
BBVA Group’s risk
management function
In the field of risk management, it is the Board of Directors that and procedures), using a proper risk infrastructure.
is responsible for approving the risk control and management
policy, as well as periodically monitoring internal reporting and • The risk infrastructure must be suitable in terms of people,
control systems. To perform this duty correctly, the Board is tools, databases, information systems and procedures so that
supported by the Executive Committee and a Risk Committee. there is a clear definition of roles and responsibilities, ensuring
Both the corporate Risk area and the risk units in the business efficient allocation of resources between the corporate area
areas also play an essential role in the Group’s risk management, and the risk units in the business areas.
each with well-defined roles and responsibilities. Thus, the
corporate Risk area establishes the global risk management Based on these principles, the Group has developed an
strategies and policies, while the risk units in the business integrated risk management system that is structured around
areas propose and maintain the risk profile of each customer three main lines of action:
independently, but within the corporate action framework.
• A set of tools, circuits and procedures that make up
The Group’s risk function, Global Risk Management, is a unique, differentiated management systems.
independent and global function whose principles are:
• A system of internal control mechanisms.
• The assumed risks must be compatible with the target capital
adequacy and must be identified, measured and assessed. • A corporate risk governance plan which separates functions
Monitoring and management procedures and sound control and responsibilities.
and mitigation systems must likewise be in place.
• It is each business area’s responsibility to propose and
maintain its own risk profile, within their independence in the
corporate action framework (defined as the set of risk policies
72 Risk management
Integration of risks and
overall risk profile
Integration of risks
The economic capital required to cover the each of the risks is defined individually (credit,
Group’s losses is calculated by integrating market, structural and operational), taking
the various risks managed by the Institution. into account the special features in each
The difference between this economic capital case. In the second stage, they are added to a
required and the sum of the individual capitals common measurement through a model that
is known as the benefit of diversification, as looks at the structure of dependency between
the total capital needed is less than the sum of risks.
the individual capitals.
In this framework, the diversification level
The BBVA Group’s risk integration model of each of the risks depends, mainly, on the
recognizes diversification among the various relative size of the risk against global risk, as
types of risks. The calculation process is well as the correlation among risks and the
divided into two stages. In the first stage, characteristics of individual loss distributions.
Structural
Credit risk Credit equity risk Market
risk risk
Diversification
Market risk
Structural interest
Operational Structural exchange rate risk
risk rate risk
Operational risk
Total risk Distribution of Interdependency
overall losses between types of risk
Economic
Expected capital
loss
Other risks
WB&AM 12%
The United
States 14%
South
America 13%
Mexico 17%
(1) The growth rates presented are calculated against the close at constant exchange rates in December 2009 (€22,302m), which includes the annual effects of recalibration and
review of the models, as compared to the figure as at December 31 published in the 2009 Annual Report, of €22,135m.
74 Risk management
Credit risk
Credit risk 75
The accompanying charts show default rates of some of the segment, to the lowest for the preferred customers) and activity.
reactive scoring tools used by the Group. An inactive card is defined as one which is not being used, and
its probability of default is expected to be lower than that of an
They show, for example, that both the loan seasoning and the active card. This can be seen by comparing both charts.
score can serve to assess the risk of a retail-type operation. Chart
5 shows the default rates, at one year, of BBVA Spain mortgages. A feature of reactive scorings is that the default rates of the
Charts 6 and 7 show, for BBVA Spain credit cards, the different various segments tend to converge over time. In BBVA, this loss
levels of default of groups with different degrees of client loyalty, of screening capacity is mitigated by combining reactive with
by contract length (from the highest for the non-customer behavioral and proactive scorings.
5
35% 15%
% segmentation over total portfolio
Non-customer
30%
Non-customer
25%
10%
Default rate
Non-preferred 20%
customer
15%
Non-preferred 5%
customer 10%
5%
Preferred
customer
0% 0%
Up to 1 year From 1 to 2 years From 2 to 3 years More than 3 years
Preferred
customer
Seasoning
70% 5%
Non-customer
% segmentation over total portfolio
60%
4%
Non-customer
50%
Default rate
Non-preferred 40% 3%
customer 35 15
30% 2%
30
Non-preferred
customer 20%
25
1% 10
10%
Preferred 20
customer
0% 0%
15
Up to 6 months From 6 to 12 months From 12 to 18 months More than 18 months
Preferred 5
customer 10
Seasoning
5
0 0
Hasta 1 a o Entre 1 y 2 a os Entre 2 y 3 a os A partir de 3 a os
76 Risk management
Behavioral scorings are used to review contracts that have same purpose as the other scorings, i.e. authorizing operations,
already been granted by incorporating information on setting limits and monitoring risk.
customer behavior and on the contract itself. Unlike reactive
scoring, it is an a posteriori analysis, i.e. once the contract has A correct management of the reactive, behavioral, proactive
been awarded. It is used to review credit card limits, monitor and bureau tools by the Group allows to gather updated
risk, etc. and takes into account variables directly linked to risk parameters adapted to economic reality. This results in
the operation and the customer that are available internally: precise knowledge of the credit health of operations and/or
the behavior of a particular product in the past (delays in the customers. This task is particularly relevant in the current
payments, default, etc.) and the customer’s general behavior economic situation, as it allows identification of the contracts
with the Entity (average balance on accounts, direct debit and customers that are in difficulties, and thus the necessary
bills, etc.). measures can be taken to manage risks that have already
been assumed.
Proactive scoring tools take into account the same variables
as behavioral scorings, but they have a different purpose,
as they provide an overall ranking of the customer, rather Rating
than of a specific operation. This view of the customer is
supplemented by calibrations adapted to each product type. These tools are focused on wholesale customers: companies,
The proactive scorings the Group has available enable it to corporations, SMEs, the public sector, etc., where the defaults are
monitor customers’ credit risk more precisely, to improve predicted at the customer rather than contract level.
risk screening processes and to manage the portfolio more
actively, such as offering credit facilities adapted to each The risk assumed by BBVA in the wholesale portfolios is classified
customer’s risk profile. in a standardized way by using a single master scale for the
whole Group that is available in two versions: a reduced one
As an example, the chart shows the default probability curve with 17 degrees; and an extended one, with 34. The master scale
for the proactive scoring for BBVA Spain credit cards in aims to discriminate the credit quality levels, taking into account
accordance with the credit rating and for active cards geographical diversity and the different risk levels in the different
(Chart 8). wholesale portfolios in the countries where the Group operates.
The so-called bureau scoring models, widely used in the The information provided by the rating tools is used when
Americas, are also of great importance. This kind of tool is deciding on accepting operations and reviewing limits.
similar to the scorings explained above, except that while the
latter are based on internal information from the Bank itself, Some of the wholesale portfolios managed by BBVA are
bureau scoring requires credit information from other credit low default portfolios, in which the number of defaults is low
institutions or banks (on defaults or customer behavior). In (sovereign risks, corporates, etc.). To obtain the PD estimates
those countries with positive bureau information, external and in these portfolios the internal information is supplemented by
internal information is combined. This information is provided external information, mainly from external rating agencies and
by credit agencies that compile data from other entities. Not the databases of external suppliers.
all banks collaborate in supplying this information, and usually
only participating entities have access to it. In Spain, the As an example, below is the parametric curve for defaults of
Bank of Spain’s Risk Information Center (CIRBE) makes such BBVA Chile’s company rating tool, by internal score assigned
information available. The bureau scorings are used for the (Chart 9).
25%
20%
Parametric
curve
Default rate
15%
5%
0%
– +
Corporate rating scores
Credit risk
77
45
40 44,59
35 22,48
The economic cycle in PD to the internal data, based on the relationship between the series
over one cycle and the observation period.
The current economic crisis has revealed the importance
of anticipation in risk management. In this context, excess
of cyclicality risk measurements has been identified as one Loss given default (LGD)
of the causes of the instability of the metrics of financial
institutions. BBVA has always been committed to estimating Loss given default (LGD) is another of the key metrics used in
average cycle parameters, parameters that mitigate the quantitative risk analysis. It is defined as the percentage risk of
effects of economic-financial turbulence in credit risk exposure that is not expected to be recovered in the event of
measurement. default.
The probability of default varies according to the cycle: it is BBVA basically uses two approaches to estimate LGD. The
greater during recessions and lower at boom periods. The most usual is that known as “workout LGD”, in which estimates
adjustment process to transfer the default rates observed are based on the historical information observed in the entity,
empirically to average default rates for the cycle is known by discounting the flows that are recorded throughout the
as cycle adjustment. The cycle adjustment uses sufficiently recovery process of the contracts in default at a certain time.
long economic series related to the default of portfolios, and In portfolios with a low rate of defaults (low default portfolio, or
their behavior is compared with that of the defaults in the LDP), there is insufficient historical experience to make a reliable
Entity’s portfolios. Any differences between the past and future estimate using the Workout LGD method, so external sources of
economic cycles may also be taken into account, thus giving the information have to be combined with internal data to obtain a
focus a prospective component. representative rate of loss given default.
Chart 10 illustrates how the cycle adjustment mechanism works. In general, the portfolios managed by the Bank show bimodal
It shows the hypothetical evolution of a series of defaults over behavior in terms of loss given default: in other words, following
more than one economic cycle. The cycle adjustment model default, the recovery of debt is in some cases total and in others,
used by BBVA extrapolates the behavior of this series of defaults nil. Chart 11 shows the distribution of the LGD of mortgage
Default ratio
Cycle average
Average for
observed period
80% 7
6
Percentage of transactions
60%
5
40%
4
20%
3
2
0%
From 0% 1 From 10% From 20% From 30% From 40% From 50% From 60% From 70% From 80% From 90%
to 5% to 15% to 25% to 35% to 45% to 55% to 65% to 75% to 85% to 95%
0 LGD tranches
78 Risk management
portfolios in BBVA Spain, filtering the most recent defaults to according to the portfolio being analyzed. Some of these are
prevent the short amount of time to recover from slanting the illustrated below with examples.
results.
• For contracts already in default, an important factor is the
The LGD estimates are carried out by segmenting operations time since the default on the contract. The longer the
according to different factors that are relevant for its calculation, contract has been in default, the lower the recovery of the
such as the default period, seasoning, the loan to value ratio, outstanding debt pending. For the purposes of calculating
type of customer, score, etc. The factors may be different the expected loss and economic capital, contracts not in
default are also imputed a LGD comparable to contracts
that have just defaulted (Chart 12).
80%
• Customer type: In the specific case of products for
companies the customer type has proven to be a relevant
70% factor. Therefore, a LGD estimate has been obtained for
each0,6721
size of company: corporations, large companies,
0,71
60% 0,7479
SMEs, etc.
No default + 0,7858
Time in default
0,8482
1
13 LGD curves by seasoning for various products in Spain
0,95
40%
0,90
0,85 30%
Credit cards
0,80
LGD rates
0,75 finance
Consumer 20%
0,70 auto
Finanzia
finance
10%
0,65
Mortgages
0%
Up to 2 From 2 to From 3 to From 4 to More than
years 3 years 4 years 5 years 5 years
Seasoning
LTV up to 60%
20%
to 70%
15% 38,82
26,89
LTV from 70% 20,64
16,69
to 80%
10%
13,64
LTV from 80%
to 90%
5%
LTV from 90%
to 100%
0%
5
4
– +
3
Seasoning
2
Credit risk 79
25 24,10 1
15 Credit card LGD, BBVA Compass (by score group) Credit card LGD, BBVA Bancomer (by exposure at 16
default, EAD)
90% 90%
80%
70%
LGD rates
LGD rates
70%
50%
60%
61,46
30%71,30
50% 75,65
Less than 2,000 From 2,000 to From 8,000 to From 30,000 to More than 38,00
+ – 80,60
Mexican pesos 8,000 Mexican 30,000 Mexican 150,000 Mexican 150,000 Mexican 62,49
70,24
pesos pesos pesos pesos
Score groups
84,54 EAD
77,73
84,37
85
80 90
75
• Score: The credit rating of contracts may be used to estimate 80 is not significantly sensitive to the cycle, as recovery
default
70
LGD, as there is a positive correlation between score and LGD processes cover extended periods of time in which the
65
(Chart 15). 70 situations of the economic cycle are mitigated.
isolated
60
60
• Exposure at default (EAD): The exposure of contracts at the In addition to being a basic input for quantifying expected
time of the default is positively related to LGD (Chart 16). losses50 and capital, LGD estimates have other uses for internal
management. For example, LGD is an essential factor for
40
Progress in building LGD scorings and ratings is becoming appropriate price discrimination. Similarly, it can be useful
increasingly important for adapting LGD estimations to 30
for determining the approximate value of a non-performing
economic and social changes. These estimates allow new portfolio in the hypothetical event of outsourcing its recovery, or
factors to be included without losing the robustness of the prioritizing potential recovery actions.
information and obtain models that are more sensitive to
improvements or deteriorations in the portfolio. BBVA has
already begun to work on incorporating these modifications in Exposure at default (EAD)
the internal models used.
Exposure at default (EAD) is another input required to calculate
In the BBVA Group, different LGDs are attributed to the expected loss and capital. It is defined as the outstanding debt at
outstanding portfolio (performing and non-performing), the time of default.
according to combinations of all the significant factors,
depending on the features of each product and/or customer. A contract’s exposure usually coincides with its outstanding
This can be seen in Chart 14, where LGD is explained according balance, although this is not always the case. For example,
to the seasoning of the contract and its loan-to-value (LTV) ratio. for products with explicit limits, such as cards or credit lines,
exposure should include the potential increase in the balance
Finally, it is important to mention that LGD varies with the from a reference date to the time of default.
economic cycle. Hence, two concepts can be defined: long-run
LGD (LRLGD), and LGD at the worst moment in the cycle, or The EAD is obtained by adding the risk already drawn on
Downturn LGD (DLGD). the operation to a percentage of undrawn risk. This
percentage is calculated using the CCF. It is defined as the
LRLGD represents the average long-term LGD corresponding percentage of the undrawn balance that is expected to be
to an acyclical scenario that is independent of the time of used before default occurs. Thus the EAD is estimated by
estimation. This scenario should be applied when calculating calculating this conversion factor. In addition, for transactions
expected losses. DLGD represents the LGD at the worst time of that exceed the limit on a reference date, the relevance of
the economic cycle, so it should be used to calculate economic incorporating to EAD the possibility of using an additional
capital, because the aim of EC is to cover possible losses percentage of the limit is assessed, according to the policy for
incurred over and above those expected. each product.
All estimates of loss given default (LGD, LRLGD and DLGD) The estimate of these conversion factors also includes
are performed for each portfolio, taking into account all the distinguishing factors that depend on the characteristics
factors mentioned above. However, no LRLGD or DLGD of the transaction. For example, in the case of BBVA Spain
estimates are made in portfolios in which the loss given company cards, the conversion factor is estimated based on
80 Risk management
17 CCFs for BBVA Spain active company cards based The portfolio model and concentration
on the limit and diversification effects
the LDPs,
In order to obtain CCF estimations for low-default portfolios,
external studies and internal data are combined, or
Credit risk in 2010
behavior similar to other portfolios is assumed and their CCFs Despite the crisis scenario forming the backdrop to
are compared. economic activity, the business model, geographical and
portfolio diversification and the prudential policy applied
Market activity 8,867 25,777 13,695 9,180 39,554 32,325 129,398 136,453 123,929
Credit entities 489 5,535 3,163 793 12,598 1,059 23,636 22,239 33,856
Fixed income 8,379 19,390 7,151 6,975 14,920 31,266 88,081 98,254 72,562
Derivatives - 852 3,381 1,411 12,036 - 17,680 15,960 17,511
Undrawn facilities 25,728 11,421 4,224 17,969 24,712 2,736 86,790 84,925 92,663
Subtotal 251,842 74,073 53,012 71,431 115,934 33,964 600,257 586,154 595,227
Credit risk 81
by the Group’s risk management have stabilized the main Group’s overall credit risk, compared with 25.7% at the close of
indicators of asset quality in 2010, whose strong performance 2009. Mexico stands out, contributing to more than half of the
has allowed BBVA to continue outperforming the industry Americas’ increase in weight.
average.
A breakdown of customer loans by sector at year-end 2010 is
BBVA’s maximum exposure to credit risk stood at €600,257m given in the enclosed table. In that regard, the loan-book in the
as of December 31, 2010, a rise of 2.4% compared with the private residents sector in Spain stood at €186 billion, and the
end of 2009. Customer credit risks (including contingent risks were highly diversified by sector and counterparty type.
liabilities), which account for 64.0%, increased 5.3% over
December 2009. This was due, in part, to the appreciation of The distribution by portfolio shows that individuals’ risk
the currencies against the euro which affected the Group’s accounts for 35,8% of total credit risk, residential mortgages
balance sheet and business, but also to the real growth being particularly important (27,6% overall, compared with 27%
in lending (which rose 2.8% at constant exchange rates). in December 2009). The LTV of this portfolio is at similar levels
Potential exposure to credit risk in market activities (21.6% to December 2009, at around 53.1%. In Spain, the LTV fell to 51%.
overall), including potential exposure to derivatives (including The vast majority of the operations are for the purchase of a
netting and collateral agreements), fell 5.2% due to principal residence home (95%).
fixed-income exposure, while undrawn facilities (14.4% overall)
rose by 2.2%. The breakdown by rating of exposure of the parent and
subsidiaries in Spain, includes companies, financial institutions,
The business areas distribution of credit risk shows that the public institutions and sovereign risks shows 62.6% of A or better
Americas have gained in weight, by more than nine percentage ratings. The breakdown by rating of the business and developer
points over the year. Overall, the Americas account for 35.1% of segment for the parent and subsidiaries in Spain is also shown.
18 BBVA Group. Maximum exposure to credit risk. BBVA Group. Exposure. Gross credit risk. Distribution 19
Distribution by type of risk by business area
(31-12-2010) (31-12-2010)
South America 9.4%
Undrawn facilities 14.4%
Loans 58%
Contingent
liabilities 6%
WB&AM 20.5%
Mexico 13.1%
Market activity 21.6%
The United States 12.6%
20
Investment grade 24.1%
82 Risk management
21 BBVA Group. Exposure. Gross credit risk. Distribution by portfolio
(31-12-2010)
22
Credit risk 83
23 Distribution by rating: corporates and developers in Spain (1)
(Exposure 31-12-2010. Percentage)
16.9
11.9 12.2
9.0
8.2 8.3 8.5
7.5 7.8
6.3
3.3
(1) Activities of the parent and subsidiaries in Spain. Includes only the banking book.
16
14.3
14 12.8
10.3
12 11.0 10.9
10
8.3
8 6.8
6.2
6
4
2 0.6 0.6 0.8
0
AAA/AA A BBB+ BBB BBB– BB+ BB BB– B+ B B– CCC/CC
The breakdown of the loan-book by rating in Mexico with of which are principal residences for public housing) and 26%
corporates and financial institutions is shown in Chart 24. with land (of which 68% is urbanized).
18
16 3. In terms of home-buyer lending, the policy is to not finance
Credit risk in the Spanish 14
developer with loan-to-value (LTV) over 80%, or otherwise, to require
sector collateral or additional guarantees. Therefore, secured loans
12
to households for the purchase of a home have an average
Policies 10 LTV of 51%, and nearly 95% of this portfolio corresponds to
8 the principal residence.
BBVA has always understood the need for 6 teams specializing
in the developer and real estate sector, given its economic 4. In the case of real estate assets acquired by BBVA, distinction
4
importance and technical component. In addition, the Group has should be made between the types: completed, in progress
2
very clear criteria regarding the management of risk from this and land. In the first type, the ultimate objective is their sale to
sector, including: 0 individuals, which is supported by the customer base and the
Group’s various distribution channels. In the second type, the
1. To avoid concentration in terms of customers, products and strategy is clearly to facilitate and promote the completion
regions. To do so, large-scale corporate transactions have of the project. And in the third type, BBVA’s majority
been avoided, as they already decreased BBVA’s market share presence on urban land simplifies the work, though planning
in the years of maximum lending growth. management and control of liquidity for the urbanization
expenses are also subject to special monitoring.
2. To not participate in the second home market, but to stand
behind public housing and to intervene in transactions on Developer risk
land with a high degree of planning security. One result of
this is the high quality of BBVA collateral, with 66% of loans to As of December 31, 2010, BBVA’s credit exposure in the
developers guaranteed with buildings (62% are homes, 89% developer sector amounted to €16.6 billion, 9% of the loans to
84 Risk management
25
the resident sector in Spain as a whole (8% including the public entered into force on September 30, 2010, amending Circular
sector) and barely 3% of the Group’s consolidated assets. 4/2004, stipulates that very severe regulatory coefficients must
be applied to the updated appraisal value of the collateral. These
At the end of 2009, BBVA carried out an exercise in coefficients range between 30% and 50%, according to the type
transparency, and recognized €1,817 million as non-performing of asset. After applying the coefficient, the excess value above
assets mainly related with this sector. Therefore the the guarantee value, which represents provisional base, amounts
nonperformance of this portfolio has been stabilized in 2010. to €1,355 million for non-performing assets, and €1,185 million for
Currently, 32% of the non-performing assets are up-to-date substandard assets.
on payments (subjective non-performing). This percentage is
standout as compared with the rest of the system.
Real estate assets
According to the last Financial Stability Report from the
Bank of Spain, as of June 2010, the exposure of the Spanish As of December 31, 2010, BBVA maintained a total of €3,259m in
banking system to said sector was €439 billion, which real estate assets at gross book value originated through lending
represents an approximate share of 7% for BBVA in this to companies. Said real estate has an average coverage of 32%,
segment, as compared to the 11.0% share in the total which is well over the regulatory requirements.
loan-book in Spain. Of this amount, €175.5 billion were
problematic assets (€47.9 billion non-performing, €57.6 billion
substandard and €70 billion acquired assets), of which BBVA Foreclosures & asset purchases
only has a 5.2% share.
to €1,224 million. Circular 3/2010 of the Bank of Spain, which Total 4,793 33.4
Credit risk 85
Expected losses
Expected loss in the non-doubtful debt portfolio, expressed The breakdown of use of attributable expected losses by areas
in consolidated terms and adjusted to the economic of business as of December 31, 2009 is shown in Chart 26. Spain
cycle average, stood at €3,216 million euros at the close of and Portugal, with an exposure which accounts for 44.8% of the
December 2010, an increase of 13.6% compared with the total, had an expected loss-to-exposure ratio of 0.40%. WB&AM
same date in 2009. accounted for 18.7% of the exposure, with a ratio of expected
loss-to-exposure of 0.10%. Mexico had a weight of 15.8% and
The main portfolios of the BBVA Group experienced use of a ratio of 0.9%; the United States had a weight of 10.2% and a
expected loss and economic capital, as shown in the following ratio of 0.9%; and South America had a weight of 10.4% and an
table. expected loss-to-exposure ratio of 1.1%.
Risk statistics for the BBVA Group’s main portfolios not in default
86 Risk management
27
Spain and Portugal Mexico South America The United States WB&AM
2010 2009 2010 2009 2010 2009 2010 2009 2010 2009
Beginning balance 11,119 5,736 1,253 933 772 595 1,887 1,121 539 106
Net entry 1,656 6,290 992 1,753 434 480 885 1,787 134 463
Write-offs (1,747) (947) (1,243) (1,448) (359) (358) (907) (960) (35) (30)
Exchange differences and others (61) 40 179 15 33 55 99 (61) (9) -
Final balance 10,967 11,119 1,181 1,253 880 772 1,964 1,887 629 539
Credit risk 87
Furthermore, the solid performance of gross additions to NPA of recoveries to new NPA for the year was 68.6%, as compared
throughout the year should also be noted, thanks in part to the to 37.8% in 2009.
proactive measures taken in late 2009 in the areas of Spain and
Portugal and the United States. Likewise, the solid performance The NPA ratio for the Group closed 2010 at 4.1%, which is down
of recovery throughout the year should also be noted; the ratio from 2009 (4.3%). This rate has been maintained throughout the
year in a controlled manner, without surpassing the maximum
level reached one year before. This demonstrates the Group’s
28
success in its proactive efforts carried out in the fourth quarter
of 2009, which enabled the stabilization of NPA levels and its
differential performance with regards to the main competitors
and the industry average. By business area, the strong
performance of NPA in Mexico stands out, as it fell more than
one percentage point in the year to 3.2%; the NPA ratio in South
America fell to 2.5%; and in Spain and Portugal, it improved 10
basis points to close the year at 5.0%. In the other areas, the NPA
ratio was practically maintained: Wholesale Banking & Asset
Management stands at 1.2% and the United States, 4.4%.
The Group’s risk premium, which measures the charge against
earnings made for net loss provisioning per lending unit,
improved 21 basis points in 2010 to 1.3%, compared with 1.5% in
2009. By business area, Mexico and the United States decreased
€
by 164 basis points (to 3.6% and 1.7%, respectively); Spain and
4,265 3,001
3,787 3,717 3,852 2,559
3,573
3,262
3,042 3,051 2,067 1,962
1,373
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2008 2008
2009 2010
2009 2010
31 Recoveries over entries to NPA. BBVA Group Risk premiums by business area 32
(Percentage) (Percentage)
37.8 68.6
5.3
4500
4000
73.2
68.4 69.4 2009 3500
64.4 3.6
3000 3.3
2010 2500
45.1
44.4 2000
32.4 1500 1.7 1.7
29.6 1.5 1.5
32.9
1.3 1000
0.9
500
0.6
0 0.2 0.3
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2008 Total Spain and Mexico South The United WB&AM
2009 2010 Group Portugal America States
88 80 Risk management
6
70
Portugal fell 28 basis points to 0.6%; and South America dropped
15 basis points to 1.5%. NPA and coverage ratios. BBVA Group 33
(Percentage)
Coverage provisions for risks with customers rose to €9,655m
on 31-Dec-2010, marking an increase of €712m on the figure at
the close of 2009. Of this, generic provisions amount to €2,832m 92
and represent 29.3% of the total. Coverage
ratio 62
57
As a result of the increase in the balance of provisions, the
coverage ratio of NPA closed 2010 at 62%. Its progress in NPA
ratio
Mexico is noteworthy, and stands at 152% (130% as of
31-Dec-2009). It remained fairly stable in the other areas: in Spain
and Portugal the rate closed at 46% (48% in 2009); in South 2.3 4.3 4.1
100
90
80
70
60
50
40
30
20
10
0
Credit risk 89
Structural risks
Structural interest-rate risk income to ensure recurrent earnings. And it does so while
making sure that exposure levels match the risk profile defined
by the Group’s management bodies and that a balance is
Structural interest-rate risk refers to the potential alteration of maintained between expected earnings and the risk level borne.
a company’s net interest income and/or total net asset value In order to facilitate proper management of balance-sheet risk, a
caused by variations in interest rates. A financial institution’s transfer pricing system exists that centralizes the Bank’s interest
exposure to adverse changes in market rates is a risk inherent in rate risk on ALCO’s books.
the banking business, while becoming an opportunity to create
value. The Group’s management is based on structural interest rate risk
measurements, whose control and monitoring is performed in
The variations in interest rates have effects on the Group’s net the Risk area, acting as an independent unit to guarantee that
interest income, from a medium and short-term perspective, and the risk management and control functions are appropriately
on its economic value if a long-term view is adopted. The main segregated. This policy is in line with the Basel Committee
source of risk resides in the time mismatch that exists between on Banking Supervision recommendations. To do so, Risks is
repricing and maturities of the asset and liability products responsible for designing models and measurement systems,
comprising the banking book. This is illustrated by Chart 34, together with the development of monitoring, reporting and
which shows the gap analysis of BBVA’s structural balance sheet control policies. It also performs monthly measurements
in euros. of interest rate risk and performs risk control and analysis,
which is then reported to the main governing bodies, such
Rates have remained at low levels in 2010, with a reduction as the Executive Committee and the Board of Director’s Risk
in long-term rates consistent with the slowdown in business Committee.
activity. This market scenario has been managed in advance
by the Financial Management unit, which through the Asset The Group’s structural interest rate risk measurement model is
and Liability Committee (ALCO), is in charge of maximizing the based on a sophisticated set of metrics and tools that enable
economic value of the banking book and preserving net interest its risk profile to be monitored. For accurately characterizing
the balance sheet, analysis models have been developed to
establish assumptions dealing fundamentally with expected
early loan amortizations and the behavior of deposits with
34 Gap of maturities and repricing of BBVA’s structural no explicit maturity. Moreover, in order to take into account
balance sheet in euros additional sources of cash flow mismatch risk, not only parallel
(Million euros) movements but also changes in the slope and curvature of
30,000 the interest rate curve, a model for simulating interest rate
curves is also applied to enable risk to be quantified in terms
20,000
of probabilities. This simulation model, which also considers
10,000
the diversification between currencies and business units,
calculates the earnings at risk (EaR) and economic capital,
0 defined as the maximum adverse deviations in net interest
income and economic value, respectively, for a particular
–10,000
confidence level and time horizon. All this in addition to
–20,000
measurements of sensitivity to a standard deviation of 100
basis points for all the market yield curves. Chart 35 shows the
–30,000 structural interest rate profile of the main entities of the BBVA
1 month 1-3 months 3-12 months 2 years 3-5 years +5 years
Group, according to their sensitivities.
90
-3626 -7492 19068 5504 -21005 Risk
-3301
management
20000
15000
35
Structural
exchange-rate risk
The currencies with the greatest capital impact on the BBVA
Group underwent widespread appreciations in 2010. The
Group’s geographical diversification, in an uncertain economic
climate and with public debt crisis episodes in Europe, has had
a positive effect on the BBVA Group’s capital ratios, equity and
earnings, due to, amongst other factors, the favorable impact of
the appreciation of the main currencies against the euro.
Limit on
80%
net interest
income
60%
40%
Limit on
economic
value
20%
0
Europe BBVA BBVA BBVA BBVA BBVA Chile BBVA Colombia BBVA BBVA
Bancomer Compass Puerto Rico Banco Francés Banco Banco Provincial
Continental
Structural risks 91
90
All these metrics are incorporated into the decision-making Although the spread applied has been increasing throughout
process by Asset/Liability Management, so that it can adapt the year, the issues have been well-received (always below the
the Bank’s risk profile to the guidelines derived from the limits CDS level). In total, €16,919m were issued in 2010, in addition to
structure authorized by the Executive Committee. Thanks to the capital increase carried out in November.
active management of FX exposure, the favorable evolution of
the currencies was taken advantage of in 2010, always keeping In all cases, the Bank has financed itself, in accordance with its
risk levels within the established limits, despite high market rating and capacity to generate recurrent results. It has never
volatility. The average hedging level of the carrying value of had to resort to public support or guarantees. Liquidity risk
BBVA investments in currencies stood at around 30%, while control in 2010 was, again, backed up by the maintenance
hedging of foreign currency earnings in 2010 remained at lower of a sufficiently large buffer of liquid assets, fully available for
levels. In addition to this corporate-level hedging, dollar positions discount, to cover the main short-term commitments. The Bank
are held at a local level by some of the subsidiary banks. Thanks has thus acted ahead of the Basel Committee, which approved
to a proactive policy in FX management, hedges exist at the the creation of the LCR (liquidity coverage ratio) in October for
closing of the year for both the carrying amounts of the BBVA implementation beginning in 2011.
investments and the expected earnings in America for 2011.
The issuance policy in 2010 has been selective and aimed at
ensuring diversified financing in a market context which is
particularly difficult for the Spanish institutions. To prepare its
Liquidity Risk medium-term strategy, the Group now has a new “Liquidity and
Financing Manual”, which sets among its general principles
There were two crucial moments in 2010 in relation to sovereign decentralized management, self-financing of the investment
debt in euro zone countries. The rescue of Greece in May and activity by business area, and long-term management, in order
Ireland’s bailout in November. Both were accompanied by strong to preserve solvency, growth sustainability, and recurrent
tensions in Spain’s country risk and increases in the spread of its earnings. This will enable the Bank to address the NSFR (net
debt against Germany’s. In May, this spread reached 200 basis stable funding ratio) that Basel intends to implement beginning
points for 10-year maturities, while in November and December in 2018.
it peaked at 300 basis points. This situation gave rise to tensions
on both monetary and long-term wholesale markets, penalizing The Finance Division, through Asset/Liability Management
institutions based on the geographical diversification of their manages structural financing and liquidity at BBVA, according
business. The credit spreads applied, both in the primary market to the policies and limits set by the Executive Committee at
(issuance) and in the secondary and derivatives markets (credit the proposal of the Risk area, which independently carries
default swaps, CDS), reached new all-time highs, exceeding those out measurement and control in each country according to a
observed in 2009. corporate scheme that includes stress analysis and contingency
plans.
In this context, liquidity management by BBVA has been
particularly proactive, through increasing the most stable retail Chart 37 shows the relative annual trend of the main indicator
liabilities and issuing in wholesale markets. There have been used in 2010, basic liquidity, which was redefined in September
senior debt or coverage bond issues, backed by mortgage or as basic capacity, for monitoring the liquidity position and its
public sector loans, during each four-month period of the year. potential risk.
140%
120%
100%
Annual
average 80%
60%
Percentage
over annual 40%
average
20%
0%
January February March April May June July August September October November December
92 Risk management
150
140
Structural risk in the equity
portfolio
The Risk area undertakes a constant monitoring of structural This monitoring function is carried out by the Risk area
risk in its equity portfolio, in order to constrain the negative by providing estimates of the risk levels assumed, which it
impact that an adverse performance by its holdings may have supplements with periodic stress and back testing and scenario
on the Group’s solvency and earnings recurrence. This ensures analyses. It also monitors the degree of compliance with the
that the risk is held within levels that are compatible with BBVA’s limits authorized by the Executive Committee, and periodically
target risk profile. informs the Group’s senior management on these matters. The
mechanisms of risk control and limitation hinge on the aspects
The monitoring perimeter of the profile takes in the Group’s of exposure, earnings and economic capital. Economic capital
holdings in the capital of other industrial and financial measurements are also built into the risk-adjusted return metrics,
companies, recorded as the investment portfolio. It includes, used to ensure efficient capital management in the Group.
for reasons of management prudence and efficiency, the
consolidated holdings, although their variations in value have In 2010, in a context of high volatility in the stock markets,
no immediate effect on equity in this case. In order to determine structural equity price risk management has been aimed at
exposure, account is taken of the positions held in derivatives of safeguarding the net-asset value of the Group’s holdings. Thus,
underlying assets of the same characters, used to limit portfolio active position management, together with the hedging policy,
sensitivity to potential falls in prices. has enabled the Bank to maintain the risk borne, which is
measured in terms of economic capital, at moderate levels.
Structural risks 93
Risks in market areas
In a year of continuing global economic crisis, combined annual basis, once they have been submitted to the Board’s
with major fluctuations in the financial markets, the function Risk Committee.
of risk control in market activities has taken on a special
importance. This limits structure is developed by identifying specific risks
by type, trading activity and trading desk. The market risk units
The activity of each of the Group’s trading floors is controlled in maintain consistency between the limits. This system of limits
terms of the possible impact of negative market conditions, both is supplemented by measures of the impact of extreme market
under ordinary circumstances and in situations of heightened movements on risk positions. The Group is currently performing
risk factors. stress testing on historical and economic crisis scenarios, as well
as impact analyses on the income statement in plausible but
unlikely economic crisis scenarios, drawn up by its Economic
Research Department.
Market risk in
market activities
In order to assess business unit performance over the year,
the accrual of negative earnings is linked to the reduction
of the VaR limits that have been set. The control structure in
The basic measurement model used to assess market risk place is supplemented by limits on loss and a system of alert
is Value-at-Risk (VaR), which provides a forecast of the signals to anticipate the effects of adverse situations in terms
maximum loss that can be incurred by trading portfolios in of risk and/or result. All the tasks associated with stress testing,
a one-day horizon, with a 99% probability, stemming from methodologies, scenarios of market variables and reports
fluctuations in equity prices, interest rates, foreign exchange are undertaken in coordination with the Group’s various Risk
rates and commodity prices. In addition, for certain positions, Areas.
other risks also need to be considered, such as credit
spread risk, basis risk, volatility and correlation risk. The VaR Finally, the market risk measurement model includes backtesting
is calculated by using a historical period of 2 years for the or ex-post comparison which helps to refine the accuracy of the
observation of the risk factors. risk measurements by comparing day-on-day results with their
corresponding VaR measurements.
Currently, BBVA, S.A. and BBVA Bancomer have been authorized
by the Bank of Spain to use their internal model to determine
capital requirements deriving from risk positions in their trading
book, which jointly accounts for 80-90% of the Group’s trading Market risk in 2010
book market risk. BBVA is in the process of incorporating the
new regulatory capital charges to comply with the most recent The Group’s market risk remains at low levels compared with
guidelines of the regulators. the aggregates of risks managed by BBVA, particularly in
terms of credit risk. This is due to the nature of the business
The market risk limits model currently in force consists of and the Group’s policy of minimal proprietary trading. In 2010
a system of VaR (Value at Risk) and economic capital limits the market risk of the Group’s trading portfolio increased
and VaR sub-limits, as well as stop-loss limits for each of the slightly on previous years to an average economic capital
Group’s business units. The global limits are proposed by the of €353m.
Risk Area and approved by the Executive Committee on an
94 Risk management
38
BBVA Group. Market risk by geographical area 39
(Average 2010)
Europe
Bancomer
South 23.0%
America
35.5%
12.5%
100
90
80
70
Market risk by risk factor. BBVA Group The main risk factor60 in the Group continues to be linked to
(Million euros) interest rates, with a50 weight of 61% of the total at the end of
40
2010 (this figure includes the spread risk). Equity risk
accounts for 9%, a fall 30 on the figure 12 months prior. In
Risk 31-12-10
contrast, exchange-rate 20 risk increased its weight slightly to
Interest + spread 29
7%. Finally, volatility 10risk remains stable at 24% of the total
Exchange rate 3
portfolio risk. 0
Equity 4
Volatility 12 By geographical area, and as an annual average, 64.5% of
the market risk corresponded to the Global Markets Europe
Diversification effect (21)
trading desk and 35.5% to the Group’s banks in the Americas,
of which 23.0% is in Mexico.
Total 28
20
Daily VaR
10
Million euros
Losses 0
–10
Profits
–20
–30
January February March April May June July August September October November December
activities uses credit risk mitigation techniques such as legal netting and
collateral agreements.
The credit risk assessment in OTC financial instruments is made The equivalent maximum credit risk exposure to
by means of a Monte Carlo simulation, which calculates not counterparties in the Group as of December 31, 2010 stood at
only the current exposure of the counterparties, but also their €44,762m, a 4.5% increase on year-end 2009. The equivalent
possible future exposure to fluctuations in market variables. maximum credit risk exposure in BBVA, S.A. is estimated at
€39,103m. The overall reduction in terms of exposure due to
The model combines different credit risk factors to netting and collateral agreements was €27,443m.
produce distributions of future credit losses and thus
allows a calculation of the portfolio effect; in other words, The net market value of the instruments mentioned in the
it incorporates the term effect (the exposure of the various BBVA, S.A. portfolio on December 31, 2010 was €1,674m and the
transactions presents potential maximum values at different gross positive market value of the contracts was €38,661m.
OTC financial instruments Gross replacement Net replacement Equivalent maximum exposure
IRS 24,286 567 24,813
FRAs 20 (5) 31
Interest rate options 3,104 (117) 2,639
OTC interest rate diversification (143)
Total OTC interest rate 27,410 445 27,340
Forward FX 2,635 55 3,707
Currency swaps 3,607 490 4,536
Currency options 248 (239) 458
OTC exchange rate diversification (512)
Total OTC exchange rate 6,490 307 8,189
OTC Equity 3,468 791 4,618
Lending 1,145 152 1,902
Commodities 149 (21) 299
OTC equity and others diversification (18)
Total OTC equity and others 4,762 922 6,801
Total diversification (3,226)
Total 38,661 1,674 39,103
Netting savings on collateral agreements 27,443
Net equivalent maximum exposure BBVA, S.A. 11,660
2010
Maximum Up to Up to Up to Up to Up to Up to As of
Type of product exposure 1 year 3 years 5 years 10 years 15 years 25 years 25 years
OTC Interest rate 27,340 26,525 23,890 16,339 11,120 3,227 2,661 2,119
OTC exchange rate 8,189 6,754 5,607 3,236 1,709 805 769 660
OTC equity and others 6,801 6,371 6,077 4,996 4,587 4,221 4,158 3,836
Total diversification (3,226)
Total 39,103 39,650 35,574 24,571 17,417 8,253 7,588 6,615
96 Risk management
41 Equivalent maximum exposure. Distribution by rating in BBVA, S.A.
30.9%
18.6%
10.5%
8.9%
7.2%
3.9% 3.6%
2.9% 2.5%
2.0% 1.7% 1.8% 1.7% 1.5%
1.3% 0.5%
0.5% 0.1%
AAA AA+ AA AA– A+ A A– BBB+ BBB BBB– BB+ BB BB– B+ B B– C NR
35
The second accompanying table shows the distribution by
Equivalent maximum exposure 42
30
maturity of the equivalent maximum exposure amounts in OTC
Geographical distribution BBVA, S.A.
financial instruments.
25
The counterparty risk assumed in this activity involved entities
with a high credit20
rating (equal to or above A– in 81% of cases). Latin America 7%
• Improved control environment and strengthened corporate Above these CIROCs is the Country-level Committee for Internal
culture. Control and Operational Risk, which deals with more significant
risks and their corresponding mitigation plans as well as risks
• Generation of a positive reputational impact. that cut across different areas. The Global Internal Risk and
Operational Risk Committee is the highest-level body in the
• The opportunity for saving in regulatory capital when the parent company, which undertakes a general monitoring of the
Bank of Spain authorizes the elimination of the lower limit. Group’s main operational risks.
98 Risk management
The corporate tools outlined below help provide a standardized Periodic monitoring is carried out on the historical distribution of
view of risk. Within a short space of time they have created a losses by geographical area and class of risk. The accompanying
common language for the whole Organization. charts show the results of this monitoring (Chart 44).
43
Disasters 1.4 Processes 22.2 Disasters 1.2 Processes 30.4 Disasters 2.1 Processes 32.1
Commercial
Commercial Commercial
practices 2.9
practices 4.6 practices 3.4
Human
Human resources 1.3 Human
resources 2.2 resources 5.9
IT 1.5 IT 2.1
IT 1.2
Internal fraud 5.4 External fraud 62.6 Internal fraud 15.2 External fraud 46.8 Internal fraud 6.8 External fraud 48.5
Operational risk 99
Operational risk capital
A calculation of economic capital for operational risk was made Distribution Approach (LDA). It is the most robust allowed by
in 2010 using the basic and standard methods, with data as of Basel from the statistical point of view.
December 31, 2010. The AMA calculation of economic capital
is now being updated with data as of June 2010, so the latest The capital estimates made in Spain and Mexico use three
information currently available for this calculation is from June information sources: the Group’s internal database (SIRO),
2009. BBVA uses the OpVision calculation engine to calculate external data from ORX and simulated events (also called
the capital. Its technical development was carried out by Risklab, scenarios). The economic capital results, according to the
Indra and BBVA. The methodology used is called the Loss different methodologies used, are as follows:
Basic method Standard method (1) AMA method (2) AMA method (3)
Spain 1,282 1,205 1,753 829
Mexico 772 673 617 311
Other 941 802 n/a n/a
(1) BBVA currently uses the capital calculated by the standard model as regulatory capital.
(2) The AMA method does not include the effect of diversification.
(3) This AMA method includes the effect of diversification.
Economic capital is the standard metric for risk calculation Technical 28.0%
the close of the year, the insurance, pension and asset Credit 22.5%
management (AM) activities are estimated to have an
economic capital of €1,269 million. Its breakdown by each
of these activities is given below.
Market 42.7%
46 Asset Management. Economic capital distribution by
type of risk
(31-12-2010)
€
Credit 0.3%
2010 2009
Exposure Clients Exposure Clients
Environmental
risk scale Millon euros % Number % Millon euros % Number %
Low (1) 107,816 82.0 180,972 80.2 112,886 81.8 192,410 79.9
Medium (2) 23,146 17.6 43,956 19.5 23,483 17.0 47,440 19.7
High (3) 471 0.4 827 0.4 1,665 1.2 927 0.4
Totals 131,433 100.0 225,755 100.0 138,034 100.0 240,777 100.0
(1) Low: activities with low or almost insignificant environmental risk in terms of their emissions.
(2) Medium: activities with moderate or high environmental risk. This bracket considers companies regardless of their size and economic solvency. In these groups, moreover,
legislative pressure and environmental auditing may constitute a major risk.
(3) High: activities with a very high potential environmental risk. One of the main features of this bracket is that the majority of the companies are large corporations with high
economic solvency. They are the ones best prepared to deal with the challenges or constraints imposed by legislation on environmental protection.
Business
areas
“BBVA gives Sebastian lives glued to his PC even when he
is not at the office. His daughter Carlota has
via cell phone” He has not lost any productivity and won a lot
in quality of life for him and his family, too.
107
Business areas
Information by area represents a basic tool in the management Banking, which handles the needs of the SMEs, corporations,
of the BBVA Group’s various businesses. In this section we government and developers in the domestic market; and
discuss the more significant aspects of the activities and all other units, among which are Consumer Finance, BBVA
earnings of the Group’s five business areas, along with those of Seguros and BBVA Portugal.
the main units within each, plus Corporate Activities. Specifically,
it includes the income statement, the balance sheet and a set of • Mexico: includes the banking, pensions and insurance
relevant management indicators, among them: the loan book, businesses in the country.
deposits, off-balance sheet funds, efficiency, non-performing
assets and coverage. • The United States: encompasses the Group’s business in the
United States and in the Commonwealth of Puerto Rico.
In 2010, certain changes were made in the criteria applied in
2009 in terms of the composition of some of the different • South America: includes the banking, pensions and
business areas. These changes affected: insurance businesses in South America.
• The United States and WB&AM: in order to give a global • WB&AM, composed of: Corporate and Investment Banking
view of the Group’s business in the United States, we decided (including the activities of the European and Asian offices
to include the New York office, formerly in WB&AM, in the with large corporate customers); global markets (trading
United States area. This change is consistent with BBVA’s floor business and distribution in Europe and Asia); asset
current method of reporting its business areas. management (mutual and pension funds in Spain); the
Group’s own long maturing equity portfolios and private
• South America. The adjustment for the hyperinflation has equity activities (Valanza S.C.R.); and Asia (through the
been included in 2010 in the accounting statements for Group’s holding in the CITIC group). Wholesale Banking &
Banco Provincial (Venezuela); this will also be carried out for Asset Management (WB&AM) is also present in the described
the 2009 statements to make them comparable. At businesses in Mexico, South America and the United States,
year-end 2009 (the first time that the Venezuelan economy but its activity and results are included in these business
was classified as hyperinflationary for accounting purposes), areas for the purposes of this report.
said impact was included under Corporate Activities to
facilitate the comparison with 2008 and in order to not As well as the units indicated, all the areas also have allocations
distort the quarterly figures of 2009. of other businesses that include eliminations and other items
not assigned to the units.
Likewise, a modification has been made in the allocation of
certain costs from the corporate headquarters to the business Finally, the aggregate of Corporate Activities includes the rest
areas that affect rent expenses and sales of IT services, though of items that are not allocated to the business areas. These are
to a lesser extent. This has meant that the data for 2009 and basically the cost of the headquarters’ various units, certain
2008 have been reworked to ensure that the different years are allocations to provisions such as early retirements and those
comparable. other of corporate nature. It also includes the Asset/Liability
Management unit, which performs management functions for the
The configuration of the business areas and their composition Group as a whole, essentially management of asset and liability
are as follows: positions in euro-denominated interest rates and in exchange
rates, as well as liquidity and capital management functions. The
• Spain and Portugal, which includes: the Retail Banking management of asset and liability interest rate risk in currencies
network in Spain, including the segments of private individual other than the euro is recorded in the corresponding business
customers, private banking and small business and retail areas. It also includes the Industrial and Financial Holdings unit
banking in the domestic market; Corporate and Business and the Group’s non-international real estate businesses.
The Group compiles reporting information on a level as • Internal transfer prices: the calculation of the net interest
disaggregated as possible, and all data relating to the businesses income of each business is performed using rates adjusted
these units manage is recorded in full. These basic units are for the maturities and rate reset clauses of the various assets
then aggregated in accordance with the organizational structure and liabilities making up each unit’s balance sheet. Earnings
established by the Group at higher level units and, finally, the are distributed across revenue-generating and distribution
business areas themselves. Similarly, all the companies making units (e.g., in asset management products) at market prices.
up the Group are also assigned to the different units according
• Assignment of operating expenses: both direct and indirect
to their activity.
costs are assigned to the business areas, except where there
is no clearly defined relationship with the businesses, i.e.
Once the composition of each business area has been defined,
when they are of a clearly corporate or institutional nature
certain management criteria are applied, of which the following
for the Group as a whole. In this regard, we should note that
are particularly important:
the primary change in criteria during 2010 related to the
• Capital: Capital is allocated to each business according assignment of costs refers to the allocation of rent expenses
to economic risk capital (ERC) criteria. This is based on in Spain and Portugal. This was formerly carried out based on
the concept of unexpected loss at a specific confidence a percentage over the book value of the real estate property
level, depending on the Group’s capital adequacy targets. and based on the area occupied. As of 2010, this allocation
These targets have two levels: the first is core equity, which will be carried out at market value.
determines the capital allocated. This amount is used as a
• Cross-selling: in some cases, consolidation adjustments are
basis for calculating the return generated on the equity in
required to eliminate shadow accounting entries in the results
each business (ROE). The second level is total capital, which
of two or more units as a result of cross-selling incentives.
determines the additional allocation in terms of subordinate
debt and preferred securities. The calculation of the ERC
combines credit risk, market risk, structural balance-sheet risk, Recurrent economic profit by business area
equity positions, operational risk and fixed asset and technical (January-December 2010. Million euros)
risks in the case of insurance companies. These calculations
are carried out using internal models that have been defined
Adjusted net Economic profit
following the guidelines and requirements established under attributable profit (EP)
the Basel II capital accord, with economic criteria prevailing Spain and Portugal 2,023 1,184
over regulatory ones.
Mexico 1,859 1,445
ERC is risk-sensitive and thus linked to the management South America 778 436
policies of the businesses themselves. It standardizes capital The United States 316 -
allocation among them in accordance with the risks incurred Wholesale Banking & Asset
and makes it easier to compare profitability across units. Management 942 491
In other words, it is calculated in a way that is standard Corporate Activities (937) (938)
and integrated for all kinds of risks and for each operation, BBVA Group 4,981 2,618
109
Spain and Portugal
This area handles the financial and 2010 at practically the same level as in 2009.
non-financial needs of private individual Finally, assets in mutual funds managed by
customers (Retail Network), including the banks and savings banks fell by 16.8%, with a
higher net-worth market segment (BBVA Banca negative volume effect in the year of €23,612m.
Privada, private banking). It also manages
business with SMEs, large corporations and In the difficult economic background, the
public and private institutions through the outcome of the Aprovecha tu Banco (Take
Corporate and Business Banking unit (CBB). Advantage of your Bank) campaign, in the
Other specialized units handle online banking, framework of Plan Uno (see section on Strategy)
consumer finance (the Consumer Finance has increased the market share in primary asset
Unit), the bancassurance business (BBVA products and funds under management in the
Seguros) and BBVA Portugal. area. Thus, Spain and Portugal consolidated
a market share gain in mortgage lending to
In 2010, household finance in the Spanish households of 33 basis points since December
market was once again stagnant, particularly 31, 2009, and reached 13.1% as of December
consumption (–11.9% as of 31-Dec-2010), 31, 2010. In the same way, the selective growth
while residential mortgage lending was up of the corporate segment according to the
0.8% year-on-year. Furthermore, the demand risk profile has also not prevented BBVA
for savings products was concentrated in from continuing to be the main supplier in
stable remunerated deposits and in other this segment, and it is one of the most active
conservative investment modalities. In this institutions in the placement of ICO funds,
regard, time deposits, for both individuals and with a market share of 11.0% as of December
companies, increased 8.4% to the detriment of 31, 2010, making it one of the leading players
the current and savings accounts, which closed in the market. Current and savings accounts
1 Spain and Portugal. Customer pyramid Spain and Portugal. Main market shares as of
31-12-2010
(Percentage)
31-12-10 31-12-09
BBVA Stock of residential mortgages 13.1 12.8
Private
Banking Corporations New residential mortgages 15.4 13.7
New consumer finance 15.3 15.1
Institutions
ICO finance 11.0 11.7
Businesses Private Stock of term deposits 8.7 6.5
individuals
SMEs Pension funds 18.3 18.6
Branches in Spain 7.9* 7.8
Balance sheet
(Million euros)
already make up 37.9% of the on-balance- The competitive advantages of the area in
sheet funds and 47% of customer deposits its commercial products have contributed
(45% in the market) thanks to the boost given to a net interest income in 2010 of €4,675m,
to household demand by the new products 4.8% down on the figure for 2009, and a
launched, including Cuenta Uno and the entire yield measured as net interest income over
range of transactional services included in the average total assets of 2.15%. Income from
Ventajas Uno scheme. It is important to note fees fell year-on-year by 6.4% to €1,388m, due
the improvement in the area’s positioning in to reductions applied to a growing number of
household and corporate time deposits, with customers, whose loyalty has increased, and
a market share as of 31-Dec-2010 at an all-time the fall mentioned above in mutual funds.
high of 8.7%. Net trading income, at €198m, together with
other income items of €368m, fell slightly
Gross customer lending was €205,776m as compared to the same period in 2009. As
of December 31, 2010, a year-on-year increase a result, gross income stood at €6,629m
of 0.7%. Mortgage lending in the household (€7,015m in 2009).
segment is growing at a sustained pace
(4.0%). The area continues to keep operating
expenses well in check, at €2,584m, which
At the same time, exposure to sectors implies a new year-on-year reduction of 1.4%.
and products of greater risk has declined. This was thanks to the continuous efforts
Customer funds grew 2.2% to €144,437m. Of in cost management, even after the end of
them, 72.5% are on-balance customer deposits, the Transformation Plan implemented in
2
3
2006, with which BBVA is ahead the rest a clear indication of its resilience and capacity
of the sector. In the last twelve months, the
to generate recurrent earnings in the current
area
has reduced its number of branches difficult economic situation.
by 31. It is worth noting that it has already
been implemented practically all of the In 2010, €233m have been generated in gains
Transformation Plan, while the sector as a
from the sale-and-leaseback of commercial
whole has only recently begun a process of
offices in Spain. A similar amount was allocated
consolidation that will probably include the for generic provisions for non-performing
closure of branches and staff reductions. assets. As a result, the net attributable profit
The
market share of the BBVA branch amounted to €2,070m (€2,275m in 2009) and
network
has steadily declined to reach 7.9% continues at a very stable level.
as of September 30, 2010 (latest available
data), although this trend is expected to be Finally, strict risk control has led to a
reversed once the rest of the sector starts reduction in the year in the NPA ratio of 10
restructuring its network. basis points to 5.0% as of December 31, 2010,
against a backdrop in which there have been
This again explains BBVA’s competitive signs of an upturn in this ratio in the system
advantage in efficiency with respect to the as a whole. The NPA ratio of banks and
system as a whole, with an efficiency ratio of savings banks closed the year at 5.7%,
39.0% and an operating income of €4,045m 64 basis points up on December 31, 2009
(€4,395m as of December 31, 2009). This gives and 70 basis points above the figure for
the area.
4,356 4,395
4,045 Ð8.0%
2008 2009 2010
Spain
and Portugal
113
6 Spain and Portugal. Net attibutable profit Spain and Portugal. NPA and coverage ratios 7
(Percentage)
2,473
2,275
2,070 Ð9.0%
Coverage
ratio
48 48 48 48 46
NPA
ratio
50 • Price management, in order to maintain the
Area strategy 45 spreads and return on assets.
40
Spain and Portugal closed 2010 with clear • Control of expenditure, which has resulted
35
competitive advantages as compared to the in improved productivity level.
30
system in terms of performance, efficiency,
25
market shares and recurrent profits. This has • Attracting more customers, by taking
20
consolidated its leadership position in the advantage of the opportunities from the
main customer segments and consolidated it15
financial system restructuring process, the
as the benchmark franchise in Spain. 10 great growth potential offered by the high
5 level of BBVA’s penetration in companies
These positive results can be attributed to and by optimizing the capillarity among
the continuity of the anticipation strategy commercial networks through the Synergy
followed in recent years, which has also Plan between CBB-Private Banking and
enabled its privileged positioning for CBB-Commercial Banking.
addressing the new economic environment
of coming years. • Customer loyalty. The Spain and Portugal
area has two particular management
Also, the area established some very clear skills that are widely renowned in the
management priorities in 2010:
8
Operating income Business volume
+144% +126%
1,291 102,707
86,229
898
11
1400
120000
1200
1000 100000
0 20000
0
market.
On the one hand, its network top financial supplier, and works to achieve
management,
which today allows the a three-fold objective to do so: increase the
distribution structure of BBVA in Spain to service quality offered and received; increase
be efficient, productive, adapted to its size the degree of customer loyalty and to provide
and, above all, close to its customers. And its customer base with tailor-made products
on the other hand, its risk management,
focused on continuous anticipatory
14
supplier of this type of loan, with an average BBVA Private Banking closed 2010 with
monthly lending of €129m and a 10.9% market funds under management in Spain of
share
in managed stock as of 31-Dec-2010. €38,944m, up 5.8% year-on-year, and with
a growth of 5.6% in its customer base due
Another
noteworthy aspect was the significant primarily to the internal and external capture
gathering of transactional funds, whose plans carried out and the strengthening
balance rose to €29,826m as of December of the BBVA Private Banking brand. At the
31, 2010, primarily due to the commercial same time, it continues to be the market
initiatives
carried out, including: the launch leader in SICAV, both in terms of assets under
of Cuenta Uno, which has become a new management (€3,017m) with a market share
reference for transactional clients in the of 11.8%, and in the number of companies
individual segment, and the Ventajas Uno (296). The unit’s core activities for 2010
transactional schemes within the Aprovecha have been technological renewal (thanks
tu banco initiative in which clients who direct to the development of a new platform of
deposit their salaries are exempt from paying systems and new channels), staff training,
maintenance fees and commissions on the implementation of Planifica (the tax
their accounts. Also noteworthy are the two optimization tool) and the new center for
new “Quincenas del Ahorro” (Two Weeks of investment solutions that centralizes the
Savings), with €1,636m captured and more than private banking service. It has also been
464,000 gifts given; the various campaigns granted the two biggest awards as the best
developed for capturing paychecks and private bank in Spain from Euromoney and
salaries, which have increased new direct The Banker (the Financial Times group)
payments by 168,000 and the capture of new for its management model, adaptation to
customers, as approximately 47% of those new regulations, investor confidence and
who took advantage of these offers were not innovation in improving customer service.
previously customers of the Entity. The gain
of 157 basis points in the year for the market The various commercial actions carried out
share in term deposits, is due primarily to the in 2010 in the SME and retailer segment
capture of 12,795m since March 2010, making (which includes the self-employed, farming
the unit’s managed stock €40,381m. Products community and small businesses) include: the
such as BBVA Uno, Depósito Líder, and plan geared toward retailers, with exclusive
Depósitos Crecientes have proven to be a solid offers, such as the Bono TPV PoS Voucher,
response to increased customer demand for which has led to an 10% increase in the
this type of product. number of stores and exceeds the market
in the increase of PoS terminal revenues, up
Finally, there also was a notable participation 13.2% from January 1, 2010 (a 5.8% increase in
by the branches network in the Group’s share all the companies linked to Servired up to the
capital increase in November 2010, through same date). Likewise, the launch of the Plan
which it attracted €1,300m. Stable resources Más Profesional has resulted in the capture of
(deposits, mutual funds, pension funds and 2,500 high-value professional clients with over
fixed-income) amounted to €112,261m. €200m in revenues. In addition, within the
geared towards increasing loyalty, cross-selling, potential clients as part of its strategic
customer base and market share gains in action. It attracted 8,500 new customers
numerous products. This, along with cost over the year, thanks to the commercial and
control, has resulted in an operating income marketing plans and initiatives carried out
slightly over that of 2009, at €1,610m (up 0.7%). (Plan Fortaleza, Factorías de clientes internas
Furthermore, the prudent risk management y externas, Folleto Prestigia, etc.). BBVA
policy led to a net attributable profit of €877m maintains a leadership position in the SME
(up 1.7% year-on-year). segment, with a penetration share of 35.2%
and a 14.4% market share as first financial
In 2010, supporting Spanish companies was supplier (according FRS-Inmark in 2009). For
a priority, and the area did so through the companies with greater turnover (between
marketing of ICO credit lines from the Official €50m and €100m), the penetration share
Credit Institute. BBVA has, for another year, was at 69%, and the first supplier share stood
played a key role as one of the most active at 21%.
entities in the distribution of various ICO lines,
with the signing of 11,403 transactions, for a Particularly notable is the positive performance
total of €1,803m. of corporates activity, with a 3.4% year-on-year
growth in lending to €17,134m, a significant
In terms of working capital, BBVA consolidated increase in customer funds (up 49.5%) to
its leadership position in Spain as of December €7,831m, and a positive trend in both the
31, 2010 with the marketing of factoring operating income (up 21.2% year-on-year to
assignments of €15,619m and accounts payable €354m) and the net attributable profit (up
advances and deferments (Reverse Factoring) 66.4% to €194m). BBVA leads the market in this
for €12,861m. On an international level, BBVA segment with a 97% market share (according
was also the leader in international factoring, to the most recent report from the Inmark
and reverse factoring in euro and other Group), and is the first supplier for 43% of its
currencies (accounts payable financing) with a customer base.
total volume of assignments and advances of
5,018 million. BBVA is still one of the market leaders
in the institutions segment. Lending
As of December 31, 2010, the unit’s loan-book increased 11.2% year-on-year to €28,226m,
stood at €90,200m, marking a slight 0.2% and customer funds totaled €11,587m
year-on-year increase. In customer funds, (€13,403m at the close of 2009). Its decrease
CBB closed the year with €27,992m, up 7.8% is primarily the result of the withdrawal
year-on-year, thanks to the great capture of wholesale deposits at high prices. This
efforts carried out and the incentive plans has not prevented it from gaining 94 basis
implemented to increase current and savings points in market share in 2010. The profitable
accounts. The above has reinforced the unit’s management of the volume of business and
liquidity to be consolidated and, therefore, cost control have led to a 5.0% year-on-year
the dependence on the financial markets for growth in operating income to €314m, and
financing the loans has decreased. 2.7% in the net attributable profit to €207m.
The leadership position in this segment is
The companies segment has a customer due to its business model with a high level
base of 80,000 active clients and has of specialization, relationship banking and a
concentrated on the management of differentiated management focus according
Concessio Estacions Aeroport L 9 S.A., Barcelona Metro sections I and IV. €200m
Tender for enforced collection contract for the Social Security system
Full management of the treasury of the General Mutual Society of State Civil Servants (MUFACE)
Only Spanish Bank to be awarded Joint European Support for Sustainable Investment in City Areas (Jessica) contract by EIB.
Insurance
Other Units This unit comprises several large companies
and has the strategic objective of being the
leader in the insurance business. It manages an
Consumer Finance extensive range of insurances through direct
insurance, brokerage and reassurance, using
The Consumer Finance unit manages
different networks.
consumer finance as well as equipment
leasing activities, through Finanzia, Uno-e
In total the unit obtained revenues of €370m
and other subsidiaries in Spain, Portugal
for the Group in 2010 from in-house policies
and Italy. The unit had an operating profit of
and €19m in brokerage on third-party policies.
€231m in 2010, which represents a year-on-
The net attributable profit was down 4.1%
year growth of 21.3%. The net attributable
year-on-year to €251m.
profit stands at –€6m (–€172m in 2009), as a
result of the increase in provisions associated
A total of €1,084m was written in premiums
with the new regulatory requirements. At
over the year, of which €900m corresponds
the same time, this has allowed the unit to
to the individual business (life and non-life)
increase its coverage ratio by 16.3 percentage
and €184m to groups. The life and accident
points.
insurance business remains positive, which
contributed €365m in premiums (up 9.1%
The loan-book under management totaled
year-on-year), boosted by the activity in
€5,546m in Spain (down 1.5% year-on-year).
payment protection products. BBVA
The car loan unit, through prescription,
Seguros is the market leader in individual
was able to respond to the market’s needs
life and accident insurance policies, with a
using the Cero Pelotero campaign that
market share of 13.0% as of September 2010
facilitated the purchase of automobiles after
(latest data available). In non-life policies, the
the disappearance of government aid. At
€186m (up 1.7% year-on-year) from multi-
the same time, it was able to increase cross-
risk home and fire insurance stand out. The
selling thanks to its high level of assurance.
volume of funds under management in
The marketing of new Inditex and Repsol
private savings policies reached €8,140m,
credit cards was noteworthy in Portugal, with
of which €3,115m correspond to individual
a loan-book of €461m (down 3.3%). In Italy,
clients and the rest to company insurance
the loan-book reached €663m (up 41.3%
schemes. Moreover, BBVA has brokered
year-on-year).
premiums for €180m.
In order to provide greater service to its Insurance) was launched. BBVA Seguros
customers, BBVA Seguros has included has received an award for most innovative
new modalities into its range for individual product for Seguro Afición, in the II Award
customers, such as Seguro Financiado for Innovation in Insurance granted by ICEA
Vivienda BBVA (a single premium multi-risk (Investigación Cooperativa entre Entidades
home insurance) and Rentas Diferidas BBVA Aseguradoras) and Accenture.
(BBVA deferred income), as a comprehensive
savings solution. New value-added services The unit achieved more than 2.9m
at no cost to the insured party have also policyholders, with an increased quality of
been added, including the Manitas and Pack service, as reflected by the complaint-free
Dependencia BBVA Class services, thus resolution of more than 97% of life insurance
boosting customer loyalty. A coinsurance claims reported and the complaint-free
agreement was also signed between BBVA resolution of 96% of home insurance policies.
Seguros and Sanitas for the marketing of Periodic independent measurements grant
health insurance. Within the framework of the home insurance policies a score of 7.5 out
BBVA’s sponsorship of the Jacobean Year of 10 for service received during the claims
2010, the “Seguro del Peregrino” (Pilgrim process.
17
This area comprises the banking, pensions and otherwise, and both scenarios can be seen
insurance business conducted in Mexico by in the adjoining tables of income statements
the BBVA Bancomer Financial Group (BBVA and balance sheets.
Bancomer).
In this environment of gradual economic
In 2010 the Mexican economy showed recovery, BBVA Bancomer has presented
signs of a steady recovery, as detailed in the very sound revenue figures that set it apart
Economic Background section of this Report, from its main competitors. Net interest
with GDP growth around 5% and inflation income saw steady progress throughout
lower than expected by the Bank of Mexico, the year, reflecting the improvement in
at 4.4%. Even so, we can expect the Bank of commercial activity, and closed 2010 at
Mexico to maintain its monetary pause at €3,688m, a similar level to 2009. Net fees and
least throughout 2011, when the policy rate is commissions increased at a year-on-year rate
expected to remain at 4.5%. of 1.9% to €1,233m, boosted mainly by the
fees charged by mutual and pension funds.
With respect to the exchange rate, the Together with the positive results obtained
Mexican peso has gained against the euro in the insurance business, this performance
both in fixing (14.4%) and average (12.3%) has helped gross income to increase slightly
rates. This has a positive impact on the on the 2009 figure, at €5,496m, despite
financial statements in the area. As is usually the reduced contribution from net trading
the case, the figures below are given at income (–5.1%).
constant exchange rates, unless indicated
122 Business areas
Income statement
(Million euros)
Units
Mexico Banking business Pensions and Insurance
2010 Δ% Δ% (1)
2009 2008 2010 Δ% Δ% (1)
2009 2010 Δ% Δ% (1) 2009
Net interest income 3,688 11.5 (0.7) 3,307 3,707 3,623 11.4 (0.8) 3,251 61 14.5 2.0 53
Net fees and commissions 1,233 14.5 1.9 1,077 1,189 1,150 12.3 (0.0) 1,024 79 55.1 38.1 51
Net trading income 395 6.6 (5.1) 370 375 283 6.2 (5.5) 266 112 8.0 (3.9) 104
Other income/expenses 179 54.8 37.9 116 155 (144) 9.5 (2.5) (131) 340 32.5 17.9 256
Gross income 5,496 12.8 0.5 4,870 5,426 4,912 11.3 (0.9) 4,411 591 27.4 13.5 464
Operating costs (1,899) 22.2 8.8 (1,554) (1,803) (1,758) 23.5 10.0 (1,423) (149) 16.9 4.1 (127)
Personnel expenses (856) 18.1 5.2 (725) (845) (784) 18.7 5.7 (661) (71) 12.7 0.4 (63)
General and administrative
expenses (956) 25.2 11.5 (764) (886) (890) 27.2 13.3 (699) (75) 21.1 7.8 (62)
Depreciation and amortization (86) 32.5 18.0 (65) (73) (84) 33.0 18.4 (63) (3) 21.0 7.7 (2)
Operating income 3,597 8.5 (3.4) 3,316 3,623 3,153 5.5 (6.0) 2,988 442 31.4 17.0 336
Impairment on financial assets
(net) (1,229) (19.4) (28.2) (1,525) (1,110) (1,229) (19.4) (28.2) (1,525) - - - -
Provisions (net) and other gains
(losses) (87) n.m. 261.2 (21) (24) (86) n.m. 273.3 (21) - n.m. n.m. (1)
Income before tax 2,281 28.8 14.7 1,770 2,488 1,838 27.4 13.4 1,442 442 31.6 17.1 336
Income tax (570) 38.8 23.6 (411) (557) (448) 37.8 22.7 (325) (122) 38.8 23.6 (88)
Net income 1,711 25.8 12.0 1,360 1,931 1,390 24.4 10.8 1,118 320 29.0 14.9 248
Non-controlling interests (4) 89.5 68.7 (2) (1) - - - - (3) 43.4 27.7 (2)
Net attributable profit 1,707 25.7 11.9 1,357 1,930 1,390 24.4 10.8 1,117 317 28.9 14.8 246
(1) At constant exchange rate.
Balance sheet
(Million euros)
Units
Mexico Banking business Pensions and Insurance
31-12-10 Δ% Δ% (1)
31-12-09 31-12-08 31-12-10 Δ% Δ% (1)
31-12-09 31-12-10 Δ% Δ% (1) 31-12-09
Cash and balances with central
banks 6,365 2.1 (10.7) 6,236 5,387 6,365 2.1 (10.7) 6,236 - - - -
Financial assets 25,737 9.2 (4.5) 23,564 20,902 20,946 4.5 (8.7) 20,053 5,050 35.6 18.6 3,725
Loans and receivables 40,277 30.9 14.5 30,764 32,155 40,029 30.7 14.3 30,619 302 53.8 34.5 196
Loans and advances to
customers 34,743 26.9 11.0 27,373 27,161 34,626 26.9 10.9 27,293 152 59.7 39.7 95
Loans and advances to credit
institutions and other 5,535 63.2 42.7 3,391 4,995 5,402 62.4 42.0 3,326 150 48.4 29.7 101
Tangible assets 887 17.8 3.0 753 709 880 17.8 3.0 747 8 14.7 0.3 7
Other assets 1,886 22.7 7.3 1,536 1,620 2,206 21.3 6.0 1,819 160 42.2 24.3 113
Total Assets / Liabilities
and Equity 75,152 19.6 4.6 62,855 60,774 70,425 18.4 3.6 59,474 5,520 36.6 19.5 4,041
Deposits from central banks and
credit institutions 12,933 21.5 6.3 10,641 9,160 12,933 21.5 6.3 10,641 - - - -
Deposits from customers 37,013 15.7 1.2 31,998 32,467 37,033 15.6 1.1 32,037 - - - -
Debt certificates 3,861 21.1 5.9 3,187 3,127 3,861 21.1 5.9 3,187 - - - -
Subordinated liabilities 2,014 34.4 17.5 1,499 1,606 2,474 32.9 16.2 1,862 - - - -
Financial liabilities held for
trading 4,855 18.9 3.9 4,085 4,110 4,855 18.9 3.9 4,085 - - - -
Other liabilities 10,992 25.2 9.5 8,780 7,461 6,121 16.4 1.8 5,259 5,231 37.0 19.8 3,818
Economic capital allocated 3,483 30.7 14.3 2,664 2,843 3,148 31.0 14.5 2,403 289 30.0 13.6 223
(1) At constant exchange rate.
Mexico 123
Relevant business indicators
20
(Million euros and percentages)
Mexico
31-12-10 Δ% Δ% (1) 31-12-09 31-12-08
Total lending to
customers (gross) 36,526 26.0 10.2 28,996 28,657
Customer deposits (2) 38,051 21.8 6.5 31,252 29,677
Off-balance sheet funds 28,122 40.2 22.6 20,065 16,376
Mutual funds 15,341 45.5 27.2 10,546 9,180
Pension funds 12,781 34.3 17.4 9,519 7,196
Other placements 3,127 12.4 (1.7) 2,781 2,830
Efficiency ratio (%) 34.6 31.9 33.2
NPA ratio (%) 3.2 4.3 3.2
Coverage ratio (%) 152 130 161
(1) At constant exchange rate.
(2) Excluding deposits and Bancomer’s Market unit repos.
Operating expenses stood at €1,899m, with a year-on-year a year before). It is also important to note that the favorable
increase of 8.8% due to greater investments in technology and trend in loan-loss provisions has not had a negative impact on
infrastructure and the launch of a strategic growth plan that coverage in the area, which progressed to 152% as of
will be in force over the coming two years. The income and 31-Dec-2010, 22 percentage points up on the figure on
expenses figures have ensured an efficiency ratio of 34.6%, 31-Dec-2009. There has also been an improvement in the NPA
among the lowest in the Mexican Banking system. Operating ratio, which closed the year at 3.2%, 1.1 percentage points below
income stands at €3,597m, a decrease of 3.4% on the figure the figure on 31-Dec-2009.
the previous year. However, it increased by 8.5% if we take into
account the exchange-rate impact. Stable income and lower loan-loss provisions meant that
in 2010, which was a transition year towards recovery,
One of the items in the income statement to improve most over BBVA Bancomer’s pre-tax profit grew year-on-year by 14.7%
2010 is impairment losses on financial assets, which fell by to €2,281m. This positive note can also be seen in the net
28.2% over the year to €1,229m. Loan-loss provisions were down attributable profit, which was up 11.9% to €1,707m. This is
year-on-year in all segments of the portfolio, particularly in the despite the increases in January 2010 in the rate of
case of credit cards. As a result, the risk premium has continued income tax from 28% to 30% and value added tax from
to fall since the start of 2010 and closed the year at 3.6% (5.3% 15% to 16%.
1,879
1,707
1,525 +11.9 (1)
2008 2009 2010
(1) At current exchange rate: +25.7%.
124 Business areas
Area strategy Mexico. Customer base evolution 24
BBVA Bancomer is a leading financial institution
in Mexico in multiple banking, pension funds, 16.3
23
Mexico 125
In 2010, a year that marked a transition for the area from environment. It will be able to construct the bank of the
the financial crisis to the start of economic recovery in future with its focus on customers and on a different form of
the country, BBVA Bancomer successfully completed its relationship with them:
Transformation Plan focused on increasing innovation and
productivity. The area has focused on the following lines of • Gaining more customers, basically through new banking
action: penetration plans that take advantage of the opportunities for
penetration to capture additional markets with potential for
• Increasing new lending and attracting more funds than the growth.
competition.
• Implementing a new clearer segmentation. This
• Maintaining the levels of recurrent earnings. includes focusing on high-value customers and offering
special services for customers that cannot be tied to
• Controlling manageable expenses, without limiting the Bank.
investment in technological innovation and networks that
boost future growth. • Increasing the loyalty of the customer base.
• Maintaining adequate asset quality. The new approach is supported by technology and a greater
diversity of distribution channels.
• Constructing and designing business initiatives to prepare
strategic positioning with a view to boosting growth over the
coming years.
Banking Business
• Maintaining the efforts designed to meet corporate
responsibility objectives. At the end of 2010, BBVA Bancomer achieved a substantial
recovery in its business and results, while maintaining its leading
It is also worth highlighting the launch in 2010 of a new strategic position in the Mexican market. This outstanding performance
plan designed to take advantage of the opportunities offered by has been recognized by the magazine Latin Finance, which
Mexico for continued growth. The Strategic Growth Plan 2010- named it the best bank in Mexico for its profit and returns, asset
2012 covers all area units, including business, central services growth, management quality, strategic vision and technological
and corporate responsibility. It is an ambitious investment plan sophistication.
that will lead to a qualitative transformation of the business
model, service, commercial efficiency (with commercial The economic recovery, the excellent commercial
objectives and plans that are an important challenge for the management of Bancomer, and improved productivity in its
area), control and monitoring of activity and risk, and thus the distribution networks, have all been reflected in its business
bank’s profitability as a whole. results. Gross lending to customers, excluding the balances
for existing homes, rose year-on-year by 10.1%, the highest
Thus for 2011, the year of economic recovery, BBVA Bancomer figure since October 2008 (+16.5%), to €36,410m at the close
will be in a privileged position to take advantage of this of 2010.
25
(Million euros at constant exchange rate)
This maintains BBVA Bancomer’s leading
position in this segment. It financed one out of
every three new mortgages and granted more
than 34,000 loans to individual customers and structure, as can be seen in Chart 27. In terms
more than 93,000 to developers. of off-balance sheet funds 2010 was notable
for the positive performance of assets under
The investment portfolio mix remains management in mutual funds, which closed
adequately diversified by segments, with a on 31-Dec-2010 at €15,341m, a year-on-year
similar breakdown to the close of 2009. It is growth of 27,2%. As a result, BBVA Bancomer
worth mentioning that throughout last year, increased its market share by 59 basis points
there was a gradual change in its composition, over the year, as well as remaining the most
with an increase in the proportion of lower-risk profitable pension fund manager in the
types. market.
The balance of customer funds (bank It is also worth highlighting the area’s
deposits, repos, mutual funds, investment adequate handling of liquidity and solvency.
companies and other placements) amounted BBVA’s model of liquidity and interest rate
to €56,519m on 31-Dec-2010, up year-on-year risk management ensures the independence
by 10.9%. Particularly notable are figures and financial autonomy of its subsidiaries. In
for current accounts, which increased Mexico, a total of MXN 29,000m debt was
by 16.5%. They thus continue to be the issued on local financial markets, with a total
main component on the liabilities side of debt issuance of MXN 118,653m. This makes
the balance sheet and ensure that BBVA BBVA Bancomer the main debt issuer on the
Bancomer maintains a profitable funding Mexican market. To ensure adequate capital
Mexico 127
management, Bancomer made the largest-ever capital notes
Government and Corporate Banking
issue by a Mexican bank on the international markets, at USD
1 billion with a term of 10 years. This issue has been placed
This unit has a specialized network of 80 branches for
with investors in the United States, Europe and Asia at a very
companies and 38 for government clients. In 2010 the number
attractive price, at a bid-to-offer ratio of 3.5.
of customers totaled 45,100, 16.0% more than in 2009. In
addition, there was a notable improvement in the lending
Finally, BBVA Bancomer has consolidated its community
penetration rate among its customers. At the close of 2010, 64%
involvement in Mexico by using its leading position to create
of customers had five or more families of products, the best
development and education programs and actions in the
figure in the last five years.
country. Over the year corporate responsibility strategy has
been integrated into the business and stakeholder dialog
has been extended. In addition, BBVA Bancomer’s Corporate
Mortgage Banking
Social Responsibility Report is the first in the Mexican financial
sector to receive the highest (A+) rating from Global Report
This unit provides finance for individuals to buy homes and
Initiative. It is also the first to submit its results for verification
lends to developers. It has maintained a sustained year-on-
by Deloitte.
year growth throughout the year. The balance of outstanding
individual mortgage loans increased by a year-on-year rate
Below are some of the most important aspects of the
of 8.1%. For the third year in a row, BBVA Bancomer was
performance of the various business units in 2010:
awarded the National Housing Prize. This time the award was
granted for offering a variety of solutions as a response to the
crisis and supporting more than 50,000 customers affected.
Commercial Banking A number of new products were launched in 2010: “Ahorra
y Estrena” (Save and move in), a mortgage loan for people
The excellent capillarity of the commercial banking unit’s
with variable income that enables them to finance their home
retail network has increased the balance of funds in current
with monthly installments equivalent to the balances of their
accounts and the assets managed in mutual funds. This
monthly savings; and the “Alia2 Plus” loan in partnership
has had a positive impact on the maintenance of a very
with Fovissste (Housing Fund of the Security and Social
profitable deposit structure and the Bank’s position as market
Services Institute for State Workers), which allows affiliates to
leader. In terms of lending, finance for SMEs and micro-
increase the amount of their loan and buy a home at a fixed
businesses showed a positive trend. The “Micro-Business
interest rate with set repayment amounts. A similar product
Card” was launched in 2010, offering lines of credit from
“Bancomer Cofinavit AG” was launched in partnership with
20,000 to 180,000 pesos, designed to finance working capital
the Institute of the National Housing Fund for Workers
mainly. This product is backed by guarantees from Nacional
(Infonavit).
Financiera. The risk is therefore shared with the Federal
Government. BBVA Bancomer has been recognized by the
Secretariat for the Economy with its SME Award 2010 for its
Corporate and Investment Banking (C&IB)
specialized service and complete range of comprehensive
financial solutions offered to its customers in this segment.
This unit’s outstanding contribution was the establishment
of a new asset class in the local market with the issue of
dollar-denominated senior bonds. C&IB has also participated
Consumer Finance as a leading issuer, including the first public issue of stock
in SARE Holding, the housing construction company, for
After nearly two years of low levels of activity due to the
MXN 930m; the issue of development capital certificates
economic crisis, the Consumer Finance unit closed 2010 with a
by Prudencial Real Estate Investors for MXN 3,095m; and
positive result in its portfolio. Origination of new loans has been
the initial public offering of shares in the Grupo Comercial
very positive, above all in recent months. The number of new
Chedraui for USD 425m, which was placed in Mexico and
consumer finance, paycheck and car loans has increased by
abroad.
58,2%. To continue boosting car loans, BBVA Bancomer signed
an agreement with Ford that in 2010 generated significant
growth in the Bank’s market share in this type of financing, of
Asset Management
more than 600 basis points. Over 2.6 millions of credit cards
have also been issued in the year, 25.1% more than in the
The unit extended its product catalog in 2010 with the launch
previous year. In addition, in 2010 the unit has boosted the use
of five new international mutual funds for private and HNW
of ATMs for issuing pre-approved paycheck loans. This increases
banking. The range of products available was extended to new
the use of multiple channels for granting finance: 27% of all
regions and countries (Asia not including Japan, Latin America,
consumer finance is now issued through channels other than
emerging countries), technological companies and dollar-
the branches. It also enlarges the product distribution options,
denominated government debt. It has given BBVA Bancomer
thus increasing the loyalty of paycheck customers and ensuring
greater coverage of international funds, with 12 funds that
that the process of processing and approval of loans is much
invest through the International Quotations System (SIC).
more efficient.
Mexico 129
South America
The South American area manages the BBVA exchange rates in the regional currencies
Group’s banking, pension and insurance over 2010, except for the Venezuelan bolivar,
businesses in the region. The area is quite which suffered a devaluation at the start of
diversified and has units operating in practically the year. The exchange-rate effect is slightly
all countries. negative in the financial statements for
South America, both in terms of the income
The year 2010 was clearly driven by statements and the balance sheets. As usual,
the macroeconomic reactivation, fully the attached tables include columns with
consolidated in recent months and closely the year-on-year changes at constant
linked to the strength of domestic demand exchange rates, to which the following
as well as the high rates of business and comments refer.
consumer confidence have reduced the
need for Government fiscal and monetary In 2010, the performance of the financial
investment incentive measures applied systems in the region has been very favorable,
since 2009. Another positive factor has been thanks to the high level of liquidity and buoyant
commodity prices, which have helped the domestic demand. For South America the
positive performance of public finances. In year has featured recovery in all the lines of
these circumstances, the forecasts for GDP business, significant progress in revenues,
growth have been revised upward a number moderation in costs and improved asset
of times over the year, and finally closed quality.
above 5%, without any significant inflationary
pressures appearing. The improvement in revenues is a direct
result of the steady increase in the loan
The expectations of rises in interest rates book, which closed 2010 at €31,512m, 21.5%
explain the moderate upward move in up on the previous year, with rises in the
individuals and corporate segments. The
upturn in lending has not led to a worsening
in the level of liquidity in the area, as
BBVA footprint in South America 31-12-2010
customer funds have also performed very
well, and closed the year at €39,133m in the
Pension fund Insurance banking business (including investment
Banks managers companies funds), 19.2% above the figure for 2009.
Argentina x x There was a particularly notable uptrend in
Bolivia x transactional products (current and savings
Chile x x x accounts were up by 26.0%). The area
Colombia x x x
registered a good deposit/loan ratio of 114.5%.
Assets managed by pension fund managers
Ecuador x
in the area were €48,800m, 17.1% up on the
Panama x
figure for December 31, 2009.
Paraguay x
Peru x x The upturn in activity has offset the effect that
Uruguay x the high competitive pressure in the region
Venezuela x x has on spreads. As a result, the net interest
Balance sheet
(Million euros)
Units
South America Banking businesses Pensions and Insurance
31-12-10 Δ% Δ% (1) 31-12-09 31-12-08 31-12-10 Δ% Δ% (1) 31-12-09 31-12-10 Δ% Δ% (1) 31-12-09
Cash and balances with central
banks 7,064 21.0 42.6 5,837 5,512 7,064 21.0 42.6 5,837 - - - -
Financial assets 8,550 11.2 10.3 7,688 5,854 6,671 (5.0) (5.8) 7,021 1,860 73.8 63.8 1,070
Loans and receivables 33,845 19.7 22.8 28,269 27,836 33,067 18.9 22.1 27,810 563 (5.9) (12.5) 598
Loans and advances to
customers 30,408 20.4 21.9 25,256 24,405 30,228 20.7 22.2 25,041 197 (17.2) (19.8) 238
Loans and advances to credit
institutions and other 3,437 14.1 31.2 3,013 3,430 2,839 2.5 20.9 2,769 366 1.6 (8.0) 361
Tangible assets 652 0.6 10.1 648 478 596 (0.6) 11.1 600 56 15.7 0.5 48
Other assets 1,551 (19.9) (19.7) 1,936 1,922 1,383 (2.6) (3.1) 1,420 130 134.4 173.8 56
Total Assets/Liabilities and
Equity 51,663 16.4 20.7 44,378 41,600 48,781 14.3 18.8 42,687 2,610 47.2 38.6 1,773
Deposits from central banks
and credit institutions 4,299 39.0 30.3 3,092 3,674 4,295 39.2 30.4 3,086 4 (57.0) (58.6) 9
Deposits from customers 33,496 14.3 22.1 29,312 27,921 33,605 14.2 21.9 29,427 - - - -
Debt certificates 1,864 19.9 4.6 1,554 1,243 1,864 19.9 4.6 1,554 - - - -
Subordinated liabilities 1,331 8.3 2.7 1,229 1,240 1,171 59.8 46.5 733 - - - -
Financial liabilities held for
trading 876 28.8 10.8 680 1,005 876 28.8 10.8 680 1 - - -
Other liabilities 7,407 17.1 24.8 6,326 4,205 5,027 (9.9) (3.4) 5,576 2,159 78.4 71.8 1,210
Economic capital allocated 2,390 9.4 5.9 2,185 2,313 1,943 19.2 18.5 1,631 446 (19.4) (27.6) 554
(1) At constant exchange rate.
4,019
3,629
ATMs 3,306
Branches
1,574 1,495 1,456
29
South America. Operating income 31
4500
4000
3500 2,129
2,000 +6.4% (1)
3000
1,625 2500
2000
1500
1000
500
0
33
Area strategy
In 2010 South America achieved highly
positive ratesof activity and income, without
any worsening in asset quality. This was the
result of the regional plans that included the
business (improved lending,
re-launch of the
increasing the customer base and increasing
the loyalty ofcustomers with greater credit
quality), improved service, cross-selling,
better risk screening, improved structures for
monitoring and collection and more weight
given to alternative channels.
Banking Business
Chile
The area’s banking business generated a net
attributable profit of €732m in 2010, 12.6% up
The Chilean economy grew by over 5% in 2010,
on the figure for the previous year.
thanks to the strength of domestic demand and
the favorable impact of high commodity prices,
Below are some of the most important aspects
particularly copper. Inflation closed the year
of the performance of the banks in the region
under 3%, within the Central Bank’s target. Over
over the year:
Colombia is also marked by the steady BBVA Panamá has focused its strategy on
improvement of its economy, particularly in improving its recognition in the market
the second half of the year, due to a significant through various sponsorship deals (including
increase in public and private investment, as the Panamanian Soccer League) that have
well as a notable recovery in exports and the supported the product range on offer to
maintenance of interest rates at all-time lows. individuals, helped by the opening of a new
As a result, GDP ended 2010 with a rise of 5%. branch. In the corporate segment, efforts have
been aimed at the agricultural sector and the
Under the guidelines set out by the Plan Free Zone, with improvements in COMEX and
Unidos (United Plan) and the New Model insurance products. Lending increased by 6.8%
of Customer Service, BBVA Colombia has over the year and customer funds by 5.8%.
€
€
Income statement
(Million euros)
ARGENTINA CHILE
BBVA Banco Francés BBVA Chile
2010 Δ% Δ% (1) 2009 2010 Δ% Δ% (1) 2009
Net interest income 357 16.4 16.5 307 301 29.0 12.1 233
Net fees and commissions 183 15.5 15.6 158 102 46.8 27.6 69
Net trading income 35 (30.0) (30.0) 50 48 (37.3) (45.5) 77
Other income/expenses (9) (24.4) (24.4) (12) 9 (42.3) (49.9) 16
Gross income 565 12.6 12.6 502 461 16.4 1.1 396
Administration costs (300) 28.9 29.0 (232) (214) 29.3 12.4 (165)
Depreciation and amortization (14) 17.9 17.9 (12) (12) (32.3) (41.2) (17)
Operating income 252 (2.4) (2.4) 258 235 10.2 (4.2) 214
Impairment on financial assets (net) (28) 8.8 8.8 (25) (60) (30.2) (39.4) (87)
Provisions (net) and other gains/losses 1 n.m. n.m. (10) (12) 41.6 23.1 (9)
Income before tax 225 1.1 1.1 223 163 37.5 19.5 118
Income tax (80) 14.4 14.5 (70) (11) (45.3) (52.4) (19)
Net income 145 (5.0) (5.0) 153 152 53.6 33.5 99
Minority interests (35) (5.3) (5.2) (37) (37) 29.8 12.8 (29)
Net attributable profit 111 (4.9) (4.9) 116 115 63.3 41.9 70
(1) At constant exchange rate.
Balance sheet
(Million euros)
BBVA Banco Francés BBVA Chile
31-12-10 Δ% Δ% (1)
31-12-09 31-12-10 Δ% Δ% (1) 31-12-09
Cash and balances with central banks 1,037 9.2 7.8 949 291 (42.3) (50.6) 505
Financial assets 911 (6.9) (8.1) 978 2,450 17.1 0.3 2,092
Loans and receivables 3,098 48.7 46.8 2,084 9,150 28.9 10.4 7,099
Loans and advances to customers 2,737 45.8 43.9 1,878 8,717 31.9 12.9 6,610
Loans and advances to credit institutions
and other 361 75.3 73.0 206 433 (11.4) (24.1) 489
Tangible assets 103 9.0 7.6 94 89 18.4 1.4 75
Other assets 94 (48.4) (49.0) 182 651 10.8 (5.1) 588
Total Assets/Liabilities and Equity 5,243 22.3 20.7 4,288 12,632 21.9 4.4 10,359
Deposits from central banks and credit institutions 36 112.7 109.9 17 1,644 46.5 25.4 1,123
Deposits from customers 4,115 24.3 22.7 3,310 7,076 27.7 9.3 5,541
Debt certificates - - - - 919 10.2 (5.7) 835
Subordinated liabilities - - - - 629 80.1 54.2 349
Financial liabilities held for trading 1 n.m. n.m. - 768 32.4 13.4 580
Other liabilities 861 11.9 10.5 770 1,273 (23.7) (34.7) 1,669
Economic capital allocated 229 20.0 18.5 191 322 22.9 5.2 262
(1) At constant exchange rate.
199 19.8 4.2 166 207 74.1 57.0 119 996 (20.7) 47.1 1,256
102 12.1 (2.5) 91 119 27.7 15.2 93 153 (31.4) 27.2 223
173 74.6 51.8 99 224 5.6 (4.8) 212 187 (36.7) 17.5 295
8,423 33.1 15.7 6,329 10,130 38.5 24.9 7,313 8,906 (23.5) 41.9 11,642
761 24.4 8.2 612 1,347 75.0 57.7 770 203 (46.0) 0.3 375
5,942 33.3 15.9 4,458 6,709 36.2 22.8 4,925 7,195 (21.0) 46.6 9,107
476 59.4 38.6 298 376 19.1 7.4 316 - - - -
161 14.7 (0.3) 140 335 102.1 82.2 166 37 (46.1) 0.0 69
58 22.2 6.2 47 49 (4.7) (14.1) 51 - - - -
378 34.5 17.0 281 1,027 21.5 9.6 845 1,178 (33.5) 23.3 1,773
648 31.7 14.5 492 287 19.5 7.8 240 293 (7.7) 71.3 318
(1) Panama, Paraguay, Uruguay, Bolivia and Ecuador. Also includes eliminations and other charges.
South America. Data per country (banking business, pensions and insurance)
(Million euros)
This area encompasses the Group’s business in the United otherwise, and both scenarios can be seen in the adjoining
States and in the Commonwealth of Puerto Rico. It also tables.
incorporates the assets and liabilities of BBVA’s office in
New York, which garners the activity carried out with large In this situation, the rate at which BBVA USA’s loan book was
corporations and businesses in New York and the business of shrinking slowed considerably in the final months of 2010. In
markets and distribution in the same area. the last quarter the fall was only 1.8% (–3.1% in the previous
quarter), and over the year as a whole the drop was 10.7%
The economic surge in the United States at the end of to €39,570m. However, it is worth highlighting the selective
2009 lost steam at the start of 2010, although growth growth of lending in the area, with a change in the portfolio
continued and ended at 3% for the year as a whole. Even so, mix towards items of less cyclical risk resulting from a clear
the recovery is limited, as is explained in the section “The focus on customer loyalty, credit quality, promotion of cross-
Economic Background,” for three reasons: the slowdown in selling and customer profitability. Thus the residential real
the real estate market; the weakness in employment; and estate portfolio increased by 28.6% over the year, while
the deleveraging process in which households are still commercial, industrial and corporate loans were up 10.7%.
involved. In contrast, the construction real estate portfolio has fallen
by 40.7%.
Inflation in 2010 continued in check, as forecast, while
interest rates are expected to remain at exceptionally low In addition, adequate risk control in 2010 and the proactive
levels as long as the economic situation does not improve measures taken in the fourth quarter of 2009, consisting of
significantly. additional loan-loss provisioning to increase the coverage
ratio in the area, have led to better asset quality. As a result,
Finally, the exchange rate of the dollar against the euro has the NPA ratio ended the year at 4.4% (4.2% as of 31-Dec-
continued to appreciate. Final exchange rates were up 7.8% in 2009) and the coverage ratio was up to 61% (58% 12 months
the last twelve months, closing on 31-Dec-2010 at $1.34/euro. earlier).
Average rates appreciated by 5.2% to $1.33/euro. Overall, this
has had a positive effect on area’s financial statements and
business over the year. As is normally the case, the figures
below are given at constant exchange rates, unless indicated
36
Balance sheet
(Million euros)
The United States
31-12-10 Δ% Δ% (1) 31-12-09 31-12-08
Cash and balances with central banks 2,284 162.3 143.3 871 699
Financial assets 7,469 7.4 (0.4) 6,953 9,717
Loans and receivables 39,729 (6.4) (13.2) 42,437 42,595
Loans and advances to customers 38,408 (4.1) (11.1) 40,056 40,926
Loans and advances to credit institutions and other 1,321 (44.5) (48.5) 2,381 1,669
Inter-area positions 4,883 (80.1) (81.6) 24,581 18,852
Tangible assets 795 11.8 3.7 711 772
Other assets 2,453 4.7 (2.9) 2,342 1,489
Total Assets/Liabilities and Equity 57,613 (26.0) (31.4) 77,896 74,124
Deposits from central banks and credit institutions 6,690 (8.1) (14.8) 7,280 11,034
Deposits from customers 42,343 (31.9) (36.9) 62,200 55,533
Debt certificates 501 (1.7) (8.8) 510 662
Subordinated liabilities 1,141 2.0 (5.4) 1,118 1,460
Inter-area positions - - - - -
Financial liabilities held for trading 360 92.9 78.9 187 451
Other liabilities 3,838 6.1 (1.6) 3,617 2,453
Economic capital allocated 2,741 (8.2) (14.8) 2,985 2,531
(1) At constant exchange rate.
constant-exchange rates and 5.5% excluding
(1) At current exchange rate: Ð3.8%. the exchange-rate effect), thanks to the
(2) At current exchange rate: Ð32.2%. contribution of Guaranty and the repricing
effort made. Another positive effect is from the
reduction of impairment losses on financial
38 assets as a result of the change in the loan
portfolio mix to lower-risk items (excluding
last-year’s one-offs, this item fell by 24.6%).
Finally, the lack of additional charges such as
the deterioration in goodwill in 2009 also had a
positive impact.
335
236
Ð996
2008 2009 2010
Area strategy strategic alliance represents a gain in
global dimension for BBVA, and also
responds to its commitment to sport
In 2010, the United States area focused on: and sporting values. The first advertising
campaign in the United States promoting
• The consolidation of the BBVA franchise the NBA sponsorship has already
in the country. This has led to increased been launched, called “Team. Works.” It
revenue synergies, more effective and emphasizes the importance of teamwork
better coordinated management of risks, in achieving success, and the Bank’s
relations with supervisory bodies and effort to become a team colleague and
access to financial markets, as well as a create winning experiences. Another
notable gain in market share. BBVA is now key component of this association is
in 18th place in the United States in terms of support for “NBA Cares,” the league’s
volume of customer funds, compared with social responsibility initiative. The aim is to
24th place a year earlier. These results are remodel schools in the five markets where
explained by the successful integrations BBVA Compass operates.
of Guaranty, BBVA Bancomer USA and the
WB&AM business in the country within • Strict monitoring and risk control, which
BBVA Compass. has resulted in selective growth in the
loan book towards lower-risk items. The
• The Transformation Plan for the business aim of these measures is also to prepare
to a customer-centric model. A number the Bank for the new economic and
of initiatives have been undertaken in this regulatory environment to be faced by the
respect. First, the sales process has been sector.
transformed through the introduction of
a new working environment following The management priorities for 2011 will
the implementation of the “Business continue in line with the work begun and
Scenarios” tool. This provides an developed in 2010, and focus on:
integrated view of the customer at the
start of each of the business processes • Making progress in implementing
and makes the customer relationship the technological platform. The
easier. This has had a positive impact on implementation will be the basis for the new
commercial productivity. The development strategic growth plan for the area.
and introduction of this tool also ensures
progress in the process of aligning the • Developing, attracting and retaining the best
infrastructure of BBVA Compass with talent.
the corporate technological platform.
Second, a new value-based customer • Continuing to work on the new brand
segmentation has been introduced, by positioning. This will include the
which customers are offered different development of a new design for the
products and services depending on their branch network. The various acquisitions in
specific needs, as well as being assigned recent years have resulted in a mixture of
appropriate managers and/or advisers. images in each of the branches forming the
United States franchise. It is therefore crucial
• Improvement in distribution capacity to continue with the creation of a single
through the implementation of the branch format to strengthen BBVA’s brand
corporate management and sales image.
model. This has also led to an increase in
commercial productivity, thanks to factors • Implementing a Differentiation Plan that
such as the greater use of alternative is capable of supplying the products and
channels to the branch network, such as cell services required for the needs of the
phones and the Internet. Bank’s different customers through the
appropriate channels. And, of course,
• BBVA’s new brand positioning in the technology will play an important role in
country. A long-term agreement has all this.
been signed with the National Basketball
Association (NBA) to turn the Group into To sum up, work will continue in 2011 with a
the official bank of the most important customer-centric approach, in line with the
basketball league in the world. This Group’s corporate model.
42
This is the result of a reduction in finance
for real-estate developers (–45.2%), which
was partly offset by a notable effort made
by BBVA Compass with SMEs. A number
of products have been launched aimed
at SMEs, such as the Integrated Payables,
which offers a way of combining payments
into a single file and route them using the
lowest cost method, and the updating of
the Controlled Disbursement Account,
which provides customers with the CDA
Perfect Presentation reports that notify
them of all the checks entering their
accounts each day and thus enables
Fixed Annuity, which has attracted $350m
companies to maximize their liquidity
in similar assets from other banks. The
management.
Managed Money plan offers customers
who do not meet the typical Wealth
• Corporate Banking, specialized in large
corporations, has increased its loan book Management profile the chance to have
an investment account managed by
by 3.2%, with a major rise in deposits (up
professionals.
80.5%).
• Finally, the business in New York follows
• Retail Banking has a volume of loans of
the same pattern as the rest of the WB&AM
€10,730m (up 4.3%). The reduction in the units in the Group: a focus on higher
auto dealer and student loan portfolios added-value and more loyal customers,
was more than offset by an increase in price management and the promotion
residential real estate. Customer funds
of cross-selling. As a result, the loan book
fell by 6.8%, due to the 9.0% reduction in
was down by 31.4%, while gross income
higher-cost funds, while more liquid funds
only fell by 17.9%. NPA still barely exist, and
increased by 2.8%. BBVA Compass and
the greater loan-loss provisions compared
SmartyPig concluded a strategic alliance
to the previous year have resulted in
in 2010 through which BBVA Compass
increased coverage.
will act as a depositary for SmartyPig
customers in the United States. Compass
for your Cause, a program designed
for NGOs and launched at the end of
2009, has not only tripled the number
Other units
of organizations involved, but increased As of December 31, 2010, BBVA Puerto Rico
the number of donors to NGOs by more managed a loan portfolio of €2,850m, down
than 700%. Finally, in the health sector, 9.3% from the previous year. Customer
joint teams have been formed made deposits amounted to €1,588m, at similar
up of representatives from the Retail, levels to the close of 2009. In all, the operating
Commercial, Wealth Management and income fell over the year by 10.0% to €70m,
Insurance units. They offer a wide variety but the reduced impairment losses on financial
of products, including a new service that assets (a year-on-year fall of 64.1%) pushed the
allows payments to be collected from net attributable profit to over €1m, compared
patients at medical consultations. with a loss of €71m in the previous year.
• The Wealth Management unit has a loan Finally, BTS reported a net attributable profit
book of €2,047m, deposits of €3,686m and of €11m, €1.7m down on the previous year.
assets under management of €13,188m. In Revenues dropped 9.5% as the number of
2010 it launched the fixed-income product transactions declined by 4.0%.
45
46
Balance sheet
(Million euros)
Units
Wholesale Banking & Asset Management Corporate and Investment Bankng Global Markets
31-12-10 Δ% 31-12-09 31-12-08 31-12-10 Δ% 31-12-09 31-12-10 Δ% 31-12-09
Cash and balances with central
banks 1,768 189.9 610 1,488 153 124.7 68 1,607 200.4 535
Financial assets 55,729 (8.7) 61,024 64,113 405 (3.2) 418 52,041 (10.9) 58,441
Loans and receivables 48,346 13.2 42,695 56,871 30,607 (0.7) 30,808 16,700 57.6 10,598
Loans and advances to customers 35,754 16.5 30,684 39,846 28,490 (2.8) 29,323 7,026 n.m. 1,222
Loans and advances to credit
institutions and other 12,591 4.8 12,011 17,024 2,118 42.6 1,485 9,674 3.2 9,376
Inter-area positions 12,644 n.m. - - - - - 28,676 53.2 18,714
Tangible assets 35 8.9 32 39 1 47.3 1 3 (9.0) 3
Other assets 3,000 36.3 2,202 1,548 25 (13.2) 29 1,208 3.7 1,165
Total Assets/Liabilities and Equity 121,522 14.0 106,563 124,058 31,191 (0.4) 31,324 100,235 12.1 89,455
Deposits from central banks and
credit institutions 31,575 0.6 31,399 22,292 3,512 n.m. 573 27,815 (9.1) 30,615
Deposits from customers 43,819 25.7 34,864 36,089 10,608 3.7 10,233 33,210 34.8 24,630
Debt certificates 1 n.m. - 191 1 n.m. - - - -
Subordinated liabilities 2,322 18.0 1,967 2,150 837 0.1 836 565 19.2 475
Inter-area positions - n.m. 183 16,918 13,321 (20.7) 16,790 - - -
Financial liabilities held for trading 34,812 13.0 30,799 38,303 - - - 34,811 13.0 30,799
Other liabilities 5,113 36.8 3,738 4,534 1,664 18.4 1,405 2,833 35.0 2,099
Economic capital allocated 3,879 7.4 3,613 3,581 1,247 (16.0) 1,486 999 19.3 838
47 48
geographical areas.
This requires the support of three factors:
49 51
Corporate and Credit Insurance Corporation) was signed with
the participation of CNCB. BBVA has been
3rd volume
Europe 2nd Mandated lead manager Dealogic Number of transactions
Latin America 3rd
Mandated lead manager Dealogic Number of transactions
Mexico 3rd
Mandated lead manager Dealogic Number of transactions
Global 3rd Mandated lead manager Dealogic Number of transactions
Global (PFI/PPP) (2)
4th
Mandated lead manager Dealogic Number of transactions
Equity capital markets Spain 4th Bookrunner/Global coordinator Dealogic Volume
Structured trade finance Best Trade Finance Bank in Latin America 2010 Global Trade Review / Trade & Forfaiting Latin America
Review / Trade Finance Magazine
Project finance 5 Deals of the Year 2010 (3 Europe, 2 America) Project Finance Magazine Awards / Europe/
Euromoney the Americas
Cash management Best provider of cash management enterprises services Cash Management Poll / Euromoney Europe
in Spain
Institutional custody Top Rated in Spain Global Investor Magazine / Euromoney Spain
Project finance Transport/Road Deal of the year. Peninsula link Project Finance Magazine Awards Asia-Pacific
Global Markets
This unit handles the origination, structuring,
distribution and risk management of market
products traded through markets in Europe, Asia
and the Americas.
Global Markets. Customer income 53
In 2010, GM has continued with its geographical evolution
diversification by extending its product and
distribution capacities in the main international
financial centers. Currently, 67.4% of its revenues 79
+16
are generated outside Spain. In order to
percentage points
continue with its globalization process, the 63
52
Market
Institution 2008 2009 2010 share 08-10 25
Location Ranking Source
Best Competitive Pricing Spain 1 Structured Retail Products
Best Innovative Product Ideas Spain 1 Structured Retail Products
Structured Products Europe Awards 2010 Spain 1 Structured Products
Best Third Party USD Rate Structures Asia-Pacific 1 MTN-i
Best Structured Product (Retail) Spain 1 Risk España
Overall Interest Rates Spain 2 Risk España
Overall Equity Derivatives Spain 2 Risk España
Overall Currencies Spain 1 Risk España
In asset management there has been a growing commitment In addition, the acquisition of an additional 4.93% in CNCB was
to socially responsibly investment (SRI), which includes new made effective in April for approximately €1,000m, increasing
extra-financial, environmental, social, ethical and corporate the Group’s holding in the entity to its current 15%. BBVA is one
governance variables (ESG variables) into management, with the of the few strategic international investors that has not only
aim of obtaining greater returns on portfolios through a correct maintained but actually increased its position in the Chinese
management of ESG risks. In fact, the employment pension banking sector during the crisis. Also worth mentioning is the
scheme for people working for BBVA (worth over €2,500m) is capital increase in CNCB of up to 2.2 new shares for 10 old
entirely managed under SRI criteria. ones. The board of the Chinese bank approved this increase
to support the development and high rate of growth of its
banking business. The bank closed an excellent year 2010,
Industrial and Real Estate Holdings with remarkable growth rates in practically all its lines of
business (as of 30-Sep-2010, the loan book was up 12.7% on
This unit diversifies the area’s businesses with the aim of the figure for 31-Dec-2009, and customer deposits were up
creating value in the medium and long terms through the active 22.1%). Profit generation was above market expectations, with
management of a portfolio of industrial holdings and private the accumulated figure to September up 47.6% year-on-year.
equity, international and real estate funds. The management In 2010 the collaboration agreement for pensions was also
fundamentals are profitability, asset turnover, liquidity and concluded with CNCB. Its aim is to take advantage of BBVA’s
optimal use of economic capital. capacity and CNCB’s local presence to develop pension plans
in China.
Currently, it manages a portfolio of holdings in more than 50
companies from a wide variety of sectors. Among them are In India, another of the strategic markets in the Asian
Corporación IBV, Bolsas y Mercados Españoles (BME), Técnicas continent and in the sphere of retail banking, BBVA and the
Reunidas, Tubos Reunidos, Desarrollo Urbanístico Chamartín, Bank of Baroda entered an agreement in December to create
the international funds Darby Latin American Private Equity a joint company for credit cards. Once approval from the
Fund L.P. and Palladium Equity Partners III L.L.C. and CITIC regulatory authorities has been obtained, the Group will be
Capital China Real Estates Fund III. able to acquire a 51% share in the credit card unit of the Bank
of Baroda, BobCards. BBVA will invest €34m in this transaction,
Investments were made in equity holdings for €47m in 2010, which will also give it a strategic position in India through
and sales of minor stakes of portfolio holdings for about a leading and prestigious bank that has a network of 3,100
€30m. branches and 36 million customers.
55
This area includes all those activities not generic provisions made in the first half of
included in the business areas. Basically, this the year to improve the Group’s coverage.
segment records the costs from head offices Furthermore, the heading “Provisions (net) and
with a strictly corporate function and makes other gains/losses” also increased to €893m,
allocations to corporate and miscellaneous which basically includes the provisions for
provisions, such as early retirement. It also early retirement and write-offs for acquired and
includes the assets and liabilities derived foreclosed assets. Thus, the net attributable
from the management of structural liquidity, profit for the year came to –€1,245m (–€105m
interest rate and exchange-rate risks by the the previous year).
Asset/Liability Management unit, as well as
their impact on results that are not recognized
in the business areas via transfer pricing. It
also includes portfolios and assets, with their Asset/Liability
corresponding results, where management
is not linked to customer relations, such as Management
Holdings in Industrial and Financial Companies
and Real Estate Management. The Asset/Liability Management is responsible
for actively managing structural interest rate
Over the whole year of 2010, the net interest and foreign exchange positions, as well as
income from Corporate Activities amounted to the Group’s overall liquidity and shareholders’
negative €163m, as compared to the positive funds.
€437m in 2009. This net interest income has
been negatively affected, on the one hand, Liquidity management helps to fund the
by the finalization of the mortgage loan recurrent growth of the banking business at
repricing after the 2009 fall in interest rates suitable maturities and costs, using a wide
and, on the other hand, due to the recent rise range of instruments that provide access to a
of the interest rate curve in the euro zone. large number of alternative sources of finance.
However, the substantial contribution over the A core principle in the BBVA Group’s liquidity
year of net trading income from the positive management is to encourage the financial
contribution of the ALCO portfolios throughout independence of its banking subsidiaries
the first half-year resulted in gross income of in the Americas. This aims to ensure that
€684m, 33.7% below the same figure for 2009. the cost of liquidity is correctly reflected in
Operating expenses increased to €798m, price formation and the sustainable growth
compared with €755m in 2009, due to new in the lending business. After the period of
investments in the new technological platform tranquility originating out of the results of
as well as image and brand identity. Operating the European Bank’s stress tests in July 2010,
income accumulated to December was –€114m the crisis in Ireland has again generated
(€276m in 2009). unusual financial market volatility. This has
been the result of an acute perception of
Impairment on financial assets amounted to sovereign debt risk attributed to various
€916m in 2010, significantly over the €107m European countries during the months of
recorded in 2009. This increase in the volume October, November and December. BBVA has
of impairment is primarily due to greater continued to operate with complete normality
Balance sheet
(Million euros)
31-12-10 Δ% 31-12-09 31-12-08
Cash and balances with central banks (88) n.m. 411 (930)
Financial assets 28,445 (15.6) 33,701 18,793
Loans and receivables 1,091 (36.7) 1,724 5,451
Loans and advances to customers (1,386) n.m. 883 (198)
Loans and advances to credit institutions and other 2,477 194.7 840 5,650
Inter-area positions (17,578) (28.5) (24,596) (18,852)
Tangible assets 3,030 (1.0) 3,060 3,530
Other assets 14,698 10.9 13,251 13,637
Total Assets/Liabilities and Equity 29,597 7.4 27,551 21,629
Deposits from central banks and credit institutions 12,428 (26.2) 16,837 18,137
Deposits from customers 15,649 292.9 3,983 2,765
Debt certificates 78,590 (16.7) 94,319 93,456
Subordinated liabilities 5,920 (23.8) 7,768 6,278
Inter-area positions (86,944) (10.8) (97,446) (100,943)
Financial liabilities held for trading (3,796) 18.2 (3,212) (1,027)
Other liabilities (3,817) 121.4 (1,724) (685)
Valuation adjustments (770) n.m. (62) (930)
Shareholders' funds 33,150 26.8 26,152 23,387
Economic capital allocated (20,814) 9.2 (19,065) (18,809)
The Group’s capital management has a twofold aim: to Holdings in Industrial and
maintain the levels of capitalization appropriate to the business
targets in all the countries in which it operates; and, at the Financial Companies
same time, to maximize the return on shareholders’ funds
through efficient allocation of capital to different units, sound This unit manages the portfolio of industrial and financial
management of the balance sheet and proportionate use investments in companies operating in the telecommunications,
of the various instruments that comprise the Group’s equity: media, electricity, oil, gas and financial sectors. Like Asset/Liability
stock, preferred stock and subordinate debt. In this last quarter, Management, this unit lies within the Group’s Finance Division.
BBVA has very successfully executed a capital increase after
the announcement of its purchase of 24.9% of the Turkish bank BBVA applies strict requirements to this portfolio in terms of
Garanti. The current levels of capitalization ensure compliance risk-control procedures, use of economic capital and return on
with all of its capital objectives. investment, diversifying investments across different sectors. It
also applies dynamic hedging and monetization management
Foreign exchange risk management of BBVA’s long-term strategies to holdings. In 2010, investments were made totaling
investments, basically stemming from its franchises in the €434m and divestitures came to €409m.
Americas, aims to preserve the Group’s capital ratios and ensure
stability of its income statement, while controlling the impact On December 31, 2010, the market value of the Holdings in
on reserves and the costs of this management. In 2010, BBVA Industrial & Financial Companies portfolio was €4,168m, with
has maintained a policy of actively hedging its investments in unrealized capital gains of €993m.
Mexico, Chile, Peru and the dollar area. Its aggregate hedging
was close to 30%. In addition to this corporate-level hedging, In 2010, the management of the industrial and financial holdings
dollar positions are held at a local level by some of the subsidiary generated €317m in dividends and €142m in trading income,
banks. The Group also hedges its foreign exchange exposure giving a net attributable profit of €404m.
on expected 2010 and 2011 results in the Americas. In 2010, the
favorable performance of most of the currencies in the Americas
has had a positive effect on the Group’s equity and income
statement. For 2011, the same prudent and proactive policy will Real Estate Management
be pursued in managing the Group’s foreign exchange risk from
the perspective of its effect on capital ratios and on the income The Group has always worked with expert teams for the
statement. management of the real estate and developer sector. Thus, the
Real Estate Management unit focus is to provide specialized
The unit also actively manages the structural interest rate management of the real estate assets it has acquired from
exposure on the Group’s balance sheet. This keeps the foreclosures, repossessions, purchases from distressed
performance of short and medium-term net interest income customers and the assets in BBVA Propiedad, the real estate
more uniform by cutting out interest rate fluctuations. In 2010, fund. In 2010, the Group has continued to make an important
the results of this management have been highly satisfactory. provision effort for these assets (€657m) with the aim to
Strategies were implemented to provide a hedge against a less maintain their coverage above 30%, taking as reference updated
positive economic outlook in Europe for the whole of 2010 and appraisals.
163
After eight editions of the Corporate Responsibility Report (CR) and in line with BBVA’s policy to
extend the principles of corporate responsibility to the activity of each of the business units and
areas comprising the BBVA Group, all financial, social and environmental information will, from now
on, be presented in a single document.
Corporate responsibility
principles, policies and
governance
The mission of BBVA’s CR policy is to define and strengthen • Invest in those societies in which the Group is present
behavior that generates value for all its stakeholders: customers, through support for projects, especially those involving
employees, shareholders, suppliers and society. This is based on education.
the highest levels of integrity and transparency.
In short, they are commitments aligned with the vision of
The main commitments undertaken by the Group through its “working towards a better future for people” and with BBVA’s
CR policy are as follows: principles.
• Uphold excellence at all times in its core business In terms of the organization of the CR function in the Group,
operations. corporate responsibility policy is approved by the Board of
Directors, and the Corporate Responsibility department is
• Minimize the negative impacts caused by its business responsible for managing and coordinating it. The Global
activity. Corporate Responsibility and Reputation (CRR) Committee
formulates and monitors CR policy and programs. This body
• Create “social business opportunities” to generate both social is made up of the executive managers of the Group’s main
and economic value for BBVA. areas of business and support and chaired by the Brand
Shareholders Customers
Society Employees
Regulators Suppliers
Principles
Corporate values
Management System
A way of operating:
Principles adjusted return
and Communication manager (who in turn is a member of Global CRR Committee meets at least twice a year, with the
the Bank’s Management Committee). Each of the countries Group’s Chairman-CEO and President-COO present at one of the
where the Group has a significant presence has also created meetings.
a Corporate Responsibility and Reputation (CRR) committee
with representatives from each of the local business areas, Workshops designed to promote strategic reflection on CRR
chaired by the Country Manager, who is the Bank’s CEO in each were held in 2010 in Spain and Portugal, Argentina, Chile,
country. At the close of 2010 there were local CRR committees Colombia, Peru and Venezuela. Those participating included
in Spain and Portugal, Mexico, Argentina, Colombia, Chile, the main managers of the Group’s various business areas. The
Peru, Venezuela, Paraguay and Uruguay, as well as the Global aim was to ground concepts and look for greater synergies in
Corporate Responsibility and Reputation (CRR) Committee. The developing new CR initiatives.
3
4 Relevant issues
+
Transparency
to markets
Relevance for stakeholders
Alignment with
public initiatives
Remuneration of The Bank’s financial
executive positions stability and robustness
–
– +
Relevance for the business
American Bankers
300000
Valores de futuro Association, Federal
250000
(Spain and Portugal) Deposit Insurance
200000
Corporation and Money
In Spain,150000the Global Financial Literacy Plan is run through the
Valores de futuro (Future Values) program, which is a global Smart (United States)
100000 response for elementary school and ESO-level
educational
children (7-14 years). It aims to improve the education of children BBVA Compass has continued to support this educational
50000
in the skills and values associated with the use of money, such program in partnership with the American Bankers’ Association
as responsibility,
0 prudence, saving, effort and solidarity. It is one Educational Foundation (ABAEF), focusing on the education of
of the biggest private initiatives of its kind in the world. The children, with volunteers playing a very important role. BBVA
program is given in Spanish schools during school hours. It Compass employees have participated in two programs, one
consists of a set of classroom activities supervised by teachers. entitled “Get smart about credit,” which has benefited more than
The educational material supplied focuses on people, their 3,000 children in 2010, and the other “Teach children to save,”
values and their skills. It has been developed using innovative which has benefited 1,500. Both are ABAEF initiatives designed
educational techniques to encourage the participation of to educate future consumers in the proper use of credit and the
students and their teachers through reflection and self-learning. importance of saving.
“Valores de future” has the backing of a scientific committee The first financial literacy program for adults was also launched
that reflects on and discusses the program and its continuous in 2010 through an alliance with the Federal Deposit Insurance
enrichment from an expert, objective and multidisciplinary Corporation (FDIC). In addition, support continued to be given
perspective. BBVA employees have a very important role in to the “Money Smart” program and the platform for the financial
this program as volunteers who give the workshops in the literacy plan in BBVA Compass. “Money Smart” is a program
participating schools. Their participation is key to the success that guides adults and adolescents in the proper use of financial
of the first part of this campaign, during which more than 500 products and services through 10 learning modules.
Microfinance to start its activity in Brazil, Mexico, Central America and the
Dominican Republic, as well as extending its operations in the
Chilean, Peruvian and Colombian markets by closing new deals.
The BBVA Microfinance Foundation was created in 2007 as
part of BBVA’s commitment to financial literacy (1). Currently, the With regard to strategic alliances, the second of the World Bank
Foundation has 620,584 customers in Latin America, with an (IFC) investments in the Foundation’s microfinance entities was
accumulated social impact of close to 2.5 million people, 3,350 concluded in 2010, under a strategic agreement between the
employees and 275 branches that manage a total volume of two institutions. Under this agreement, IFC bought $10m of
microcredits worth over €432m, with an average of €696 per Bancamía preference shares to boost its growth and extend
microcredit. access to productive microfinance for underprivileged people in
Colombian society.
In 2010, the BBVA Microfinance Foundation made progress
in consolidating and extending its network of microfinance
institutions in Latin America to bring its products and
services to people in the region with low incomes. Two new Banking penetration plan
institutions were added during the year to Caja Nuestra Gente
in Peru, Banco de las Microfinanzas Bancamía in Colombia, for Latin America
Corporación para las Microfinanzas in Puerto Rico, and Servicios
Microfinancieros, S.A. in Chile: Servicios Microfinancieros, S.A. As part of its banking penetration strategy for the region,
in Argentina, created following an agreement with Fundación BBVA has for a number of years been developing initiatives
Grameen and Microserfín, an institution acquired in Panama. to bring basic financial services to places not covered by the
branch network and segments of the population not covered
It is also worth highlighting that the Foundation has concluded by banking services. The banking correspondent program in
agreements of intent with a number of financial institutions Mexico and Colombia and the network of express agents in
(1) The BBVA Microfinance Foundation was created as a response to the BBVA Group’s corporate responsibility, but as a non-profit institution it is independent of it in both governance
and management. Accordingly, the BBVA Group wishes this report to reflect the fact that the BBVA Microfinance Foundation is not part of BBVA financial group. For this same
reason, the BBVA Group neither manages nor answers for the activity undertaken by the Foundation or by those financial institutions that the Foundation acquires in pursuit of its
goals.
This plan, aimed at increasing the financial inclusion of people In 2010 the plan extended to 16.3 million active customers, 1,793
in the region who have no access to basic financial services, branches and 6,760 ATMs in Mexico.
The Group has made a major commitment to the mobile The two main focuses of action in which work is being done
channel, as it is considered to offer an excellent opportunity for to ensure gender equality are: the professional development of
the most disadvantaged segments of the population to access women and maternity, by implementing measures to improve
the financial markets. The Cuenta Express service has been the balance between maternity and a professional career.
presented in Mexico to provide easy banking based entirely
on the cell phone. This service allows the customer who does The “genera!” tool is being tested as part of this project. This is a
not use banking services to carry out all kinds of financial social network for the debate of opinions on a variety of subjects
operations, including payment for services or personal payment that must later be translated into specific action plans. The
in shops exclusively by the use of the cell phone. initiative is organized by a strategic committee with high-level
representation, which is assisted by an operational committee
In the telephone channel, BBVA has continued with its plans that deals with greater detail and a managing body that acts to
to personalize and improve it as a complement to the rest of promote and organize the contributions.
the self-service channels. It currently has 3.1 million regular
customers who carried out 125 million transactions in 2010. The major progress made in this area in Spain and Argentina
deserves particular mention. In Spain, BBVA signed the Equal
A revolutionary concept of ATM has been introduced in the ATM Treatment and Opportunities Plan, which updates and develops
channel, called ABIL, which includes the latest technology and user- the Equality Agreement signed in October 2005. The aim of the
friendliness. BBVA closed 2010 with a total of nearly 17,000 ATMs. Equality Plan is to boost the development of real and effective
equality between women and men. Among the items included
It is also important to point to the important effort made to in the plan are: content related to equal opportunities and
improve access to remote channels. This effort will continue the balance between work, personal and family life; a chapter
throughout 2011 in order to ensure that the main BBVA websites devoted to protection during pregnancy, maternity and paternity;
are highly accessible according to the most demanding a protocol for action established for the prevention of sexual
standards. The objective is to reach a minimum AA rating harassment; and further development of the legal measures on
according to W3C (Worldwide Web Consortium) standards. gender violence. Also included are the commitment to draw up
a protocol for information and awareness-raising on the subject
Finally, it is important to mention the work carried out on of disability and the use of non-discriminatory language in all
transparency and clear language in customer relations. These company communications, as well as in public acts, promotion
are very important aspects in the current environment. A and advertising. At the same time, a joint equality committee
number of initiatives will be launched in 2011 to strengthen these has been created with trade-union representation to ensure the
aspects. monitoring of the Equality Plan. There was a broad consensus
in the signing of this agreement, with 97.56% of the trade-union
representation in the Bank in favor.
Human Resources Also in 2010, BBVA Banco Francés obtained the MEGA 2009
certification. This is a pilot project in Argentina that aims to
A global project has been launched in the field of diversity, and reduce gender inequality. This initiative has been promoted by
specifically in that of non-discrimination and equal opportunities, the National Institute Against Discrimination, Xenophobia and
Contracts by gender
(Percentage)
Training
Racism (INADI) and has the support and technical assistance of the law, commitment to integrity, competition, objectiveness,
the World Bank. transparency, value creation and confidentiality.
On questions of training related to CR, an online training model The need for good management of the ESG variables in the
called Sensibilización en Diversidad e Igualdad (Awareness procurement process has led to the design of two projects,
in Diversity and Equality) has been prepared. As well as this, both forming part of the development of the Group’s Global
the Responsabilidad y Reputación Corporativas (Corporate Procurement Model. One is the preparation of a Global
Responsibility and Reputation) course has been launched and is Responsible Purchasing Policy for the Group, which will be
available via the e-campus tool for all Group employees. implemented over 2011; and the other, a new procedure for
registration and pre-approval of suppliers, which will enable all
Finally, the Group gives employees who show an interest the Group’s Purchasing units to apply criteria on a standardized
in participating in community projects the chance to join basis to improve management of these impacts and lead to
in initiatives where their technical knowledge and personal increased satisfaction levels among BBVA’s suppliers.
skills can be particularly valuable. The Group has a Global
Corporate Volunteer Plan. In 2010, 5,251 BBVA Group
employee volunteer activities were carried out. In addition,
12,244 employees have contributed €4,969,347 between them The environment
to social projects.
BBVA’s environmental policy is in line with sustainable
environmental management and the fight against climate change.
The policy also includes the commitments subscribed by the
Responsible procurement Group with some of the main international environmental initiatives
in this area, such as the United Nations Environment Program
The principles of BBVA’s relations with its suppliers are governed Finance Initiative (UNEP FI), the Equator Principles, the Principles for
by the Group’s Code of Conduct and based on respect for Responsible Investment and the Carbon Disclosure Project.
–0.92%
28.8
OCT 08
GEP –0.93%
28.4
–0.94%
28.0
27.6
2007 2008 2009 2010 2011 2012
0.120 0
2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012
(1) Scope: BBVA, except the United States, Puerto Rico and Bolivia.
(2) The 2010, 2011 and 2012 figures correspond to the objectives of the plan.
0
-2
174 Corporate responsibility
-4
-6
Community Involvement
3
Total Others 1
2
CR promotion 0
Spain and 5
the rest 3
of the world
Environment
1
5
4
Latin
America 3
Healthcare 7
6
7
Culture 15
12
6
Social welfare 5
5
0
Social and
25
economic development 15
79
Education 37
53
and Mexico For over 30 years, BBVA has run an ambitious cultural
program, making it a model for art patronage. It also carries
out major educational and promotional work. In 2010, the
In 2010 the policy defined in the Community Investment Plan for
BBVA Foundation also managed cultural activities, to which
Latin America was maintained, with the allocation of a minimum
it allocated €6.3m during the year. The Group’s cultural
budget of 1% of the profit for 2009 in each country in the region
program is based on three lines of action: music, specifically
in which BBVA operates.
contemporary music and its promotion among the general
public; the arts, through key exhibitions; and education,
through the program of scholarships designed to provide
Niños adelante
advanced training for young musicians, doctors, economists
and specialists in the environment.
The star project of this plan is the Niños adelante (Forward,
children) program of scholarships for social integration, funded
with €17.4m in 2010. These scholarships have contributed to the
social integration of 53,140 children from underprivileged families
Integra Prize
through scholarships for primary and secondary education. More
BBVA’s first Integra Prize award was held in 2009 in Spain,
than 217,000 people have benefited indirectly through this aid.
to promote the social and labor integration of people with
Currently work is being done with different public and private
disabilities. This initiative has been developed in collaboration
institutions, with which more than 45 local alliances have already
with FEACEM, the ONCE Foundation, FEAPS, CERMI and
been forged. Among them is the 4-year (2008-2011) alliance
COCEMFE. The prize pays particular attention to quality
with the Organization of Ibero-American States (OIS) to promote
employment based on the innovation and sustainability
awareness of the importance early childhood education in the
generated by special employment centers (CEE). The prize,
region. Employees are also contributing their skills to ensure the
worth €200,000, was awarded in 2010 to the Majorcan
program has the largest possible social impact.
association AMADIP-ESMENT. Their CEE provides work for 294
people with intellectual disabilities and is dedicated to food
and catering, printing, graphics, maintenance, gardening and
Adelante con tu futuro
organic agriculture. A further 6 projects were awarded a total of
€300,000: the Association of Paraplegics and People with Great
The program Adelante con tu futuro (Forward with your Future)
Physical Disability in the Madrid Region (ASPAYM-MADRID);
is a model project within the Global Financial Literacy Plan, as
the Private Catalan Foundation for Cerebral Palsy (FCPC); the
commented in the section on Financial literacy.
Association for People with Mental Disability of the Barberà
Council (APRODISCA); the Association of Family Members and
Mental Patients (LENDA); Mater Traball I Natura; and Moltacte
Ruta Quetzal BBVA
SCCL.
Work in Spain children and young people in public education. The program
has enabled 25,000 children in Texas and California to have
reading books. In addition, BBVA Compass employees have
Valores de futuro
participated as volunteers.
Additional information on social and environmental issues can be found at www.bancaparatodos.com where you can also contact the CR area through Twitter (www.twitter.com/
bancaparatodos) to discuss, ask or share anything you deem appropriate. Said additional information has been verified by Deloitte, and is also in line with the Global Reporting Initiative
(GRI) and Accountability standards. In addition to the contents of this chapter, the CR reports for the Group, as well as local CR reports from Mexico, Chile, Venezuela, Colombia, Peru,
Argentina and the United States, are available at www.bancaparatodos.com.
them both to take them both to take their first steps through
a special loan for an MBA. Maria wanted to
179
Corporate
Governance System
Banco Bilbao Vizcaya
Argentaria, S.A.
The principles and elements comprising the Bank’s Corporate Governance are set forth in its Board Regulations, which govern
the internal procedures and the operation of the Board and its Committees and directors’ rights and duties as described in their
Charter.
BBVA’s Corporate Governance System is based on the distribution of functions between the Board, the Executive Committee and
the other Board Committees, namely: the Audit and Compliance Committee, the Appointments Committee, the Remuneration
Committee and the Risks Committee.
The Executive Committee is authorized to execute the Board’s powers of administration over the Company, except where prevailing
legislation or the Company Bylaws or Board Regulations reserve such powers to the Board.
The Chairman of the Board of Directors is also the Chief Executive Officer of the Bank, unless the Board resolves otherwise, pursuant
to its Regulations, and reasons of corporate interest make it advisable to separate the posts of Chairman and CEO.
The Board of Directors has approved the Corporate Governance Report for 2010, pursuant to the regulations regarding disclosure
standards for listed companies. It has also approved the Report on the Board Remuneration Policy presented by the Board’s
Remuneration Committee.
Shareholders can find all these documents (the Board Regulations, the Corporate Governance Report and the Report on the
Board Remuneration Policy) on the Bank’s website at www.bbva.com, created to facilitate information and communication with
shareholders. There is a special direct link to provide easy access to any information considered relevant regarding BBVA’s Corporate
Governance System.
The General Meeting is responsible for the appointment of the members of the Board of Directors. However, if a seat falls vacant, the
Board may co-opt members.
In any event, proposed candidates for appointment as directors must meet the requirements of applicable legislation in regard to the
special code for financial institutions, and the provisions of the Company’s Bylaws.
The Board Regulations establish that the Board shall be composed in such a way as to ensure that external directors represent
an ample majority over the executive directors, and that independent directors occupy at least one third of the total number of
seats.
181
At present, independent directors hold an ample majority of the Board seats, since ten of the current thirteen Board members are
independent.
For independent directorships, the Board Regulations determine certain requirements reflecting those established by the
recommendations of the Unified Code of Good Governance and are in line with the latest international standards.
Proprietary directors are external directors who directly or indirectly hold shares accounting for at least 5% of the Company’s
capital and voting rights and who represent such shareholders. For such purposes, directors are deemed to represent a
shareholder when: they have been appointed to exercise proxy rights; they are a director, senior manager, employee or non-
occasional service provider to said shareholder and/or to companies belonging to its group; corporate documents show that
the shareholder deems the director to represent or have been nominated by said shareholder; they are married to or bound by
equivalent emotional relationship, or related by up to second-degree family ties to a significant shareholder. To such effects, BBVA
does not currently have any proprietary directors.
The above criteria for determining whether a person is a proprietary director will also apply in the event of agreements or pacts
between shareholders that oblige those concerned to take concerted action in using their voting rights to adopt a common policy in
regard to management of the Company or whose goal is to influence it in a relevant manner.
Appointment of directors
The proposals that the Board submits to the Company’s AGM for the appointment or re-election of directors and the resolutions to
co-opt directors made by the Board of Directors shall be approved at the proposal of the Appointments Committee in the case of
independent directors and on the basis of a report from said Committee in the case of all other directors.
To such end, the Committee assesses the skills, knowledge and experience required on the Board and the capacities the candidates
must offer to cover any vacant seats. It evaluates how much time and work members may need to carry out their duties properly
as a function of the needs that the Company’s governing bodies may have at any time. There are no limits imposed on what people
may be named a director in the Bank.
Term of office
As established in Article 36 of the Company Bylaws the term of office of members of the Board of Directors shall be three years.
Directors may be re-elected one or more times for terms of the same maximum period.
Duties of Directors
Board members must comply with their duties as defined by legislation and by the Bylaws in a manner that is faithful to the interests
of the Company.
They shall participate in the deliberations, discussions and debates arising on matters put to their consideration and shall have
sufficient information to be able to form a sound opinion on the questions corresponding to the Bank’s governing bodies. They
may request additional information and advice if they so require in order to perform their duties. Their participation in the Board’s
meetings and deliberations shall be encouraged.
The directors may also request help from experts outside the Bank services in business submitted to their consideration whose
complexity or special importance makes it advisable.
BBVA pursues a policy of absolute transparency. Its Annual Report publishes an itemized breakdown of the remuneration received
by each member of the Board every year. This is made available to the shareholders for the Annual General Meeting. It also gives
detailed information on the remuneration policy for Board members, which will be submitted to a consultive vote at the Annual
Shareholders Meeting.
Conflicts of interest
The rules comprising the BBVA Directors’ Charter detail different situations in which conflicts of interest could arise between the
BBVA Group and its directors, their family members and organizations with which they are linked. They establish procedures for such
cases, in order to avoid conduct contrary to the Company’s best interests.
These rules help ensure directors’ conduct reflect stringent ethical codes, in keeping with applicable standards and according to core
values of the BBVA Group.
Incompatibility
Directors are also subject to rules on incompatibilities, which place strict constraints on holding posts on governing bodies of Group
companies, or companies in which the Group has a holding. Non-executive directors may not sit on the Boards of subsidiary or
related companies because of the Group’s holding in them, whilst executive directors may only do so if they are granted express
authority.
Directors who cease to be members of the Bank’s Board may not offer their services to any other financial institution competing with
the Bank or its subsidiaries for two years after leaving, unless expressly authorized by the Board. Such authorization may be denied
on the grounds of corporate interest.
Directors’ Resignation
Furthermore, in the following circumstances, reflected in the Board Regulations, directors must tender their resignation to the Board
and accept its decision regarding their continuity in office (formalizing said resignation when the Board so resolves):
• When barred on grounds of incompatibility or prohibition as defined under prevailing legal regulations, in the Company Bylaws or
in the Director’s Charter.
• When significant changes occur in their professional situation or that may affect the condition by virtue of which they were
appointed to the Board.
• When the director, acting as such, has caused severe damage to the Company’s assets or its reputation or credit, and/or no longer
displays the commercial and professional honor required to hold a Bank directorship.
183
General Meeting of
Shareholders (AGM)
Matters relating to how the General Meeting is run and to shareholders’ rights are covered in the BBVA General Meeting Regulations,
which shareholders and investors can also consult on the Bank’s website, www.bbva.com.
The Regulations establish that notice of meeting for the AGM shall state the shareholders’ right, as of the date of its publication, to
immediately obtain any proposed resolutions, reports and other documents required by law and under the Company Bylaws at the
Bank’s registered offices, free of charge.
They will also find documents relating to the AGM on the Company website, with information on the agenda, the proposals from
the Board of Directors and any relevant information shareholders may need to vote. It shall also include necessary details regarding
shareholder information services, indicating telephone numbers, email address, branch offices and opening hours.
The Regulations establish the procedures to be followed in the public call for proxies, in compliance with the law and the Company
Bylaws.
They stipulate that the form of proxy must contain or be attached to the agenda, and include a request for voting instructions so that
shareholders may stipulate the general way in which their proxy shall vote should no precise instructions be given.
They also determine how directors should formulate the public call for proxy and the way they should exercise the shareholders’
representation and vote, with rules covering possible conflict of interests. They also establish the most significant aspects related to
the operation of the AGM, voting procedures for motions presented to it, how resolutions are to be adopted and other issues related
to running an AGM.
Under the Company Bylaws, the Company’s AGMs may be attended by anyone owning 500 shares or more, providing that, five
days before the date on which the AGM is to be held, their ownership is recorded on the pertinent registers and they retain at least
this same number of shares until the AGM is actually held. Holders of fewer shares may group together until achieving the required
number, appointing a representative.
The above notwithstanding, if holders of fewer shares than the Bylaws establish for entitlement wish to attend, they may apply for
an invitation to the AGM through the shareholders helpdesk, the website or any BBVA branch. It will be facilitated to them where the
inevitable space constraints in the facilities where AGMs can be held allow this, given the very high number of shareholders in the
Company.
In accordance with the Company Bylaws, the Regulations state that shareholders may delegate their voting rights on motions
regarding agenda items of any kind of General Meeting or exercise them by post, email or any other remote means of
communication, provided the voter’s identity is duly guaranteed.
Any shareholders entitled to attend may be represented at the AGM by another shareholder, using the form of proxy the Company
establishes for each AGM, which will be displayed on the attendance card.
To facilitate communication with the Company’s shareholders regarding the organization of the AGMs, the Bank’s Board of Directors
operates a permanent helpdesk to manage shareholders’ requests for information, clarification and questions.
Pursuant to the Capital Companies Act, BBVA has set up an Online Shareholder Forum on the Bank’s website (www.bbva.com).
Individual shareholders and voluntary associations constituted pursuant to prevailing regulations may access the Forum with due
guarantees, in order to facilitate their communication during the run-up to the General Meeting.
The BBVA Board of Directors comprises thirteen directors actively performing their duties. Of them eleven are external directors,
ten of them being independent, and two of them are executive directors. The attached chart shows the names of the Board
members, the date they were appointed, and the kind of directorship they have, pursuant to the Bank’s Board of Directors’
Regulations:
Board of Directors
Francisco González is member of the European Financial Services Roundtable (EFR), Vice-president of the Institute for International
Finance (IIF), member of the Institut Européen d’Études Bancaires (IIEB), Board member of the IMF Capital Markets Consultative
Group, Board member of the International Monetary Conference, member of the Global Advisory Council of the Conference Board
and member of the International Advisory Committee for the New York Federal Reserve, as well as other international forums.
He is also Chairman of the Fundación BBVA and Governor of the Red Cross, Foundation for Help Against Drug Addiction, Foundation
for Terrorism Victims, the Guggenheim Museum in Bilbao, Museo de Bellas Artes in Bilbao, Fundación Príncipe de Asturias, Real
Instituto Elcano, Fundación Carolina, ESADE, FEDEA, Fundación de Estudios Financieros, Instituto de Estudios Económicos and
Institut Europeu de la Mediterránia.
Prior to the merger between Banco Bilbao Vizcaya and Argentaria, Francisco González was Chairman of Argentaria from 1996 to
1999, when he led the integration, transformation and privatization of a very diverse group of State-owned banks.
Before joining Argentaria, Francisco González founded the securities firm, FG Inversiones Bursátiles, which became the first
independent firm of brokers in Spain.
Francisco González is also a registered Spanish Stock Broker (the highest-scoring candidate examined in 1980) and Trader for the
Bolsa de Madrid. He has sat on the Executive Committee of the Bolsa de Madrid and the Executive Committee of Bancoval.
He began his professional career in 1964 as programmer in an IT company. He dates his mission to transform 21st-century banking
through the application of new technologies back to this period.
In 1971 joined J&A Garrigues, becoming a partner in 1977. Held posts as Director of the M&A Department, Director of Banking and
Capital Markets, and in charge of advisory services for large public companies. Since 1985, has been a member of its Management
Committee.
His activity has been focused on mergers and acquisitions, advising large multinational corporations; he has been intensely involved
in the legal coordination of some key global IPOs and placements, for Spanish and non-Spanish companies, representing arrangers
and issuers.
He has focused on consultancy services for listed companies in their large-scale corporate operations, providing legal assistance at
their Annual General Meetings.
He is a renowned specialist in Corporate Governance, having helped several public companies to restructure their organization as
new recommendations and regulations on good governance have been published in Spain. Recently, the “International Who’s Who of
Business Lawyers” named him one of the leading legal experts worldwide in Corporate Governance.
In 1978 passed competitive exam to become a civil-service lawyer (Cuerpo de Abogados del Estado).
Was appointed Technical General Secretary to the Ministry of Territorial Administration, then Under-Secretary of the same
department in 1982.
Has acted as Board Secretary and Director of Legal Services for Empresa Nacional para el Desarrollo de la Industria, S.A. (ENDIASA);
for Astilleros Españoles, S.A.; and for Iberia Líneas Aéreas de España, S.A.
He also has acted as Legal Secretary for various governing bodies on public companies, including: Astilleros y Talleres del Noroeste,
S.A. (ASTANO); Aplicaciones Técnicas Industriales, S.A. (ATEINSA); Oleaginosas Españolas, S.A. (OESA); Camping Gas, S.A. and Aviación
y Comercio, S.A. (AVIACO).
Has been Legal Counsel for Banco Exterior, S.A.; Legal Counsel for Banco Internacional de Comercio, S.A. and Banco Central
Hispanoamericano, S.A., as well as Company Secretary of Sindibank, S.B.
Was appointed Director & Company Secretary of Argentaria in April 1997. Was appointed Director & Company Secretary of Banco
Bilbao Vizcaya Argentaria, S.A. on January 28, 2000. Took early retirement as Bank executive in December 2009.
Graduated in Law from Universidad Complutense de Madrid, winning the extraordinary first prize on graduation.
In 1967 passed competitive exam to become a civil-service lawyer (Cuerpo de Abogados del Estado).
Took up a post in the Cáceres regional tax and court department (Delegación de Hacienda y Tribunales de Cáceres); in the
Directorate General for Administrative-Contentious Law; and the Supreme Court.
Was head of the technical staff of the undersecretary for the Spanish treasury and the Director General for territorial planning.
In 1971 was appointed to director of Banco de Crédito a la Construcción.
From 1975 to 1981, was director and company secretary for Banco de Progreso.
From 1985 to 1989, he held similar posts in Corporación Financiera Alba and from 1989 to 1991, in Banco Urquijo.
Deputy Chairman of Ginés Navarro Construcciones until its merger within the new ACS Group.
Graduated in Agricultural Engineering from the Madrid School of Agricultural Engineers and in Economics and Business Studies from
the Universidad Complutense de Madrid.
The ordinary meetings of the Board of Directors take place monthly and an annual schedule of the ordinary sessions is drawn up
sufficiently in advance.
The Board of Directors shall meet whenever its Chairman or the Executive Committee deem it advisable, or at the behest of at least
one quarter of the Board members in office at any time.
The Board may also meet when all its members are present and unanimously resolve to constitute a meeting.
The agenda shall include the matters determined by the Chairman of the Board, either at his/her own initiative or at the suggestion of
any director, deemed to be advisable for the Company’s best interests.
Directors shall be provided with any information or clarification they deem necessary or appropriate in connection with the business
to be considered at the meeting. This can be done before or during the meetings.
The Chairman shall encourage the participation of directors in the meetings and deliberations of the Board and shall put matters to a
vote when he/she considers they have been sufficiently debated.
Group executives and other persons may join the meetings should the Chairman deem their attendance advisable in light of the
business laid before the Board.
Article 48 of the Company Bylaws establishes that the Board of Directors, in order to best perform its duties, may create any
Committees it deems necessary to help it on issues that fall within the scope of its powers. A description of the composition of the
Board’s Committees is given below.
Board Committees
Executive Audit and
Full name Committee Compliance Appointments Remuneration Risks
González Rodríguez, Francisco x
Cano Fernández, Ángel x
Alfaro Drake, Tomás x x
Álvarez Mezquíriz, Juan Carlos x x
Bermejo Blanco, Rafael x x
Bustamante y de la Mora, Ramón x x
Fernández Rivero, José Antonio x x
Ferrero Jordi, Ignacio x x
Loring Martínez de Irujo, Carlos x x
Maldonado Ramos, José x x x
Medina Fernández, Enrique x x
Rodríguez Vidarte, Susana x x x
The Board of Directors has constituted an Executive Committee, to which it has delegated all its powers of administration, except
those that cannot be delegated under the law and/or Bylaws and Regulations due to their essential nature.
The Executive Committee comprises five members. Of these, two are executive directors and three are independent:
The Executive Committee deals with those matters that the Board of Directors has delegated to it in accordance with prevailing
legislation, the Company Bylaws and/or the Board Regulations.
• To formulate and propose policy guidelines, the criteria to be followed in the preparation of programs and to set targets, to
examine the proposals put to it in this regard, comparing and evaluating the actions and results of any direct or indirect activity
carried out by the Entity.
• To arrange inspections and internal or external audits of all areas of the Entity’s operation.
Specifically, the Executive Committee is entrusted with evaluation of the Bank’s System of Corporate Governance. This shall be analyzed
in the context of the company’s development and of the results it has obtained, taking into account any regulations that may be passed
and/or recommendations made regarding best market practices, adapting these to the company’s specific circumstances.
The Executive Committee shall meet on the dates indicated in the annual calendar of meetings and when the Chairman, or acting
Chairman, so decides.
The Board Regulations establish that the Audit & Compliance Committee shall have a minimum of four members appointed by the
Board in the light of their know-how and expertise in accounting, auditing and/or risk management. They shall all be independent
directors, one of whom shall act as Chairman, also appointed by the Board.
The BBVA Audit & Compliance Committee comprises the following members:
• Report to the General Meeting on matters that are raised at its meetings and within its scope of competence.
• Propose the appointment of auditors or audit firms to the Board of Directors for it to submit the proposal to the General Meeting,
in accordance with applicable regulations.
• Establish appropriate relations with the auditors or audit firms in order to receive information on any matters that may jeopardize
their independence, for examination by the Committee, and any others that have to do with the process of auditing the accounts;
as well as those other communications provided for in laws and standards of audit. It must unfailingly receive written confirmation
by the auditors or audit firms each year of their independence with regard to the Entity or entities directly or indirectly related to
it, and information on additional services of any kind provided to these entities by said auditors or audit firms, or by persons or
entities linked to them as provided under Act 19/1988 of 12 July 1988, on the auditing of accounts.
• Each year, before the audit report is issued, to put out a report expressing an opinion on the independence of the auditors or audit
firms. This report must, in all events, state the provision of any additional services referred to in the previous subsection.
• Oversee compliance with applicable national and international regulations on matters related to money laundering, conduct on
the securities markets, data protection and the scope of Group activities with respect to anti-trust regulations. Also ensure that any
requests for action or information made by official bodies in these matters are dealt with in due time and in due form.
• Ensure that the internal codes of ethics and conduct and securities market trading, as they apply to Group personnel, comply with
regulations and are properly suited to the Bank.
• Especially to enforce compliance with provisions contained in the BBVA Directors’ charter, and ensure that directors satisfy
applicable standards regarding their conduct on the securities markets.
• Any others that may have been allocated under these Regulations or conferred by a decision of the Board of Directors.
To ensure the accuracy, reliability, scope and clarity of the financial statements, the Committee shall constantly monitor the process
by which they are prepared, holding frequent meetings with the Bank executives and the external auditor responsible for them.
The Committee shall also monitor the independence of external auditors. This entails the following two duties:
• Ensuring that the auditors’ warnings, opinions and recommendations cannot be compromised.
• Establishing the incompatibility between the provision of audit services and the provision of consultancy services, unless there
are no alternatives in the market to the auditors or companies in the auditors’ group of equal value in terms of their content,
quality or efficiency. In such event, the Committee must grant its approval, which can be done in advance by delegation to its
Chairman.
The Committee selects the external auditor for the Bank and its Group, and for all the Group companies. It must verify that the audit
schedule is being carried out under the service agreement and that it satisfies the requirements of the competent authorities and
the Bank’s governing bodies. The Committee will also require the auditors, at least once each year, to assess the quality of the Group’s
internal oversight procedures.
The Audit & Compliance Committee meets as often as necessary to comply with its tasks, although an annual meeting schedule is
drawn up in accordance with its duties.
Executives responsible for Accounts and Consolidation, Internal Audit and Regulatory Compliance can be invited to attend its
meetings and, at the request of these executives, other staff from these departments who have particular knowledge or responsibility
in the matters contained in the agenda, can also be invited when their presence at the meeting is deemed appropriate. However, only
the Committee members will be present when the results and conclusions of the meeting are evaluated.
The Committee may engage external advisory services for relevant issues when it considers that these cannot be properly provided
by experts or technical staff within the Group on grounds of specialization or independence.
The Committee has its own specific regulations, approved by the Board of Directors. These are available on the Bank’s website and,
amongst other things, regulate its operation.
The BBVA Board of Directors, at its meeting on May 25, 2010, resolved to set up two new committees: one to deal with Appointments
and another to deal with Remuneration. These replace the previous Appointments & Remuneration Committee in order to keep
the Bank’s Corporate Governance System at the forefront of governance practices and enhance the content of each Committee by
greater specialization in each separate matter.
Appointments Committee
The Appointments Committee is tasked with assisting the Board on issues related to the appointment and re-election of Board
members.
This Committee shall comprise a minimum of three members who shall be external directors appointed by the Board, which shall
also appoint its Chairman. However, the Chairman and the majority of its members must be independent directors, in compliance
with the Board Regulations.
• Prepare and report on the proposals for appointment and re-election of directors under the terms and conditions established in
the Board Regulations.
To such end, the Committee shall assess the skills, knowledge and experience required on the Board, as well as the conditions that
candidates should display to fill the vacancies arising.
• Review the status of each director each year, so that this may be reflected in the Annual Corporate Governance Report.
• To report on the performance of the Chairman of the Board and, where applicable, of the Company’s Chief Executive, for the
purpose of their periodic assessment by the Board.
• Should the Chairmanship of the Board or the post of Chief Executive Officer fall vacant, the Committee will examine or organize, in
the manner it deems suitable, the succession of the Chairman and/or Chief Executive Officer and put corresponding proposals to
the Board for an orderly, well-planned succession.
• Any others that may have been assigned in these Regulations or conferred by a decision of the Board of Directors.
In the performance of its duties, the Appointments Committee, through its Chairman, shall consult the Chairman of the Board and,
where applicable, the Company’s Chief Executive, especially regarding matters involving executive directors and senior management.
In accordance with the BBVA Board Regulations, the Committee may ask members of the Group organization to attend its meetings,
when their responsibilities relate to its duties. It may also receive any advisory services it requires to inform its criteria on issues falling
within the scope of its powers.
The Chairman of the Appointments Committee shall convene it as often as necessary to comply with its mission, although an annual
meeting schedule shall be drawn up in accordance with its duties.
This Committee shall comprise a minimum of three members who shall be external directors appointed by the Board, which shall
also appoint its Chairman. However, the Chairman and the majority of its members must be independent directors, in compliance
with the Board Regulations.
The duties of the BBVA Board Remuneration Committee are those established in Article 36 of the Board of Directors’ Regulations.
They are as follows:
• Propose, within the framework established in the Company Bylaws, the payment compensation system of the Board of Directors
as a whole, both as refers to its concepts and amounts and the manner of reception.
• Determine the extent and amount of the remuneration, entitlements and other economic rewards for the Chairman & CEO, the
President & COO and, where applicable, other executive directors of the Bank, so that these can be reflected in their contracts. The
Committee’s proposals on such matters will be submitted to the Board of Directors.
• Issue a Report on the directors’ remuneration policy each year. This will be submitted to the Board of Directors, which will apprise
the Company’s Annual General Meeting of this each year.
• Propose the remuneration policy for senior management to the Board, and the basic terms and conditions to be contained in their
contracts.
• Propose the remuneration policy to the Board for employees whose professional activities may have a significant impact on the
Entity’s risk profile.
• Oversee observance of the remuneration policy established by the Company and periodically review the remuneration policy
applied to executive directors, senior management and employees whose professional activities may have a significant impact on
the Entity’s risk profile.
• Any others that may have been assigned in these Regulations or conferred by a decision of the Board of Directors.
In the performance of its duties, the Remuneration Committee will consult with the Chairman of the Board and, where applicable,
the Company’s Chief Executive Officer via the Committee Chair, especially with respect to matters related to executive directors and
senior managers.
In accordance with the BBVA Board Regulations, the Committee may ask members of the Group organization to attend its meetings,
when their responsibilities relate to its duties. It may also receive any advisory services it requires to inform its criteria on issues falling
within the scope of its powers.
The Chairman of the Appointments Committee shall convene it as often as necessary to comply with its mission, although an annual
meeting schedule shall be drawn up in accordance with its duties.
Risks Committee
The Board’s Risks Committee is tasked with analyses of issues related to the Group’s risk management and control policy and
strategy. It assesses and approves any risk transactions that may be significant.
This Committee consists solely of external directors, with a minimum of three members, appointed by the Board of Directors, which
will also appoint its Chair.
• Analyze and evaluate proposals related to the Group’s risk management and oversight policies and strategy. In particular, these
shall identify:
b) Setting the level of risk considered acceptable according to the risk profile (expected loss) and capital map (risk capital) broken
down by the Group’s businesses and areas of activity.
c) The internal reporting and oversight systems used to oversee and manage risks.
d) The measures established to mitigate the impact of risks identified should they materialize.
• Monitor the match between risks accepted and the profile established.
• Evaluate and approve, where applicable, any risks whose size could compromise the Group’s capital adequacy or recurrent
earnings, or that present significant potential operational or reputational risks.
• Ensure that the Group possesses the means, systems, structures and resources benchmarked against best practices to allow
implementation of its risk management strategy.
The Committee meets as often as necessary to best perform its duties, usually once a week.
Management Committee
Chairman and CEO
Mr. Francisco González Rodríguez
President and COO
Mr. Ángel Cano Fernández
The other members of the Management Committee are
Mr. Juan Ignacio Apoita Gordo Human Resources and Services
Mr. Eduardo Arbizu Lostao Legal, Tax, Audit and Compliance Services
Mr. Juan Asúa Madariaga Spain and Portugal
Mr. José Barreiro Hernández Wholesale Banking & Asset Management
Mr. Manuel Castro Aladro Global Risk Management
Mr. Ignacio Deschamps González Mexico
Mr. José María García Meyer-Dohner Global Retail Business Banking
Mr. Manuel González Cid Finance
Mr. Ramón Monell Valls Innovation and Technology
Mr. Gregorio Panadero Illera Communication and Brand
Mr. Vicente Rodero Rodero South America
Mr. Manuel Sánchez Rodríguez The United States
Mr. Carlos Torres Vila Corporate Strategy and Development
Supplementary
information
“He bought his Marcelo likes Mondays. Although he retired
four years ago he still goes to the workshop
working with wood, Mondays is the hustle and bustle, because he has
enough peace and quiet the rest of the week.
with no timetable
and no worries”
197
Consolidated time series
Income statements
(Million euros)
IFRS (Bank of Spain’s Circular 6/2008)
Balance sheet
(Million euros)
IFRS (Bank of Spain’s Circular 6/2008)
Additional information
(Million euros)
IFRS (Bank of Spain’s Circular 6/2008)
2008 2007 2006 2005 2004 2004 2003 2002 2001 2000 1999 1998
11,891 9,769 8,374 7,208 6,160 7,069 6,741 7,808 8,824 6,995 5,760 5,516
19,853 18,133 15,701 13,024 11,120 11,053 10,656 12,241 13,352 11,143 9,108 8,374
11,279 10,544 8,883 6,823 5,591 5,440 4,895 5,577 5,599 4,376 3,457 3,120
6,926 8,495 7,030 5,592 4,137 4,149 3,812 3,119 3,634 3,876 2,902 2,374
5,385 6,415 4,971 4,071 3,108 3,192 2,897 2,466 3,009 2,914 2,168 1,785
5,020 6,126 4,736 3,806 2,923 2,802 2,227 1,719 2,363 2,232 1,746 1,424
31-12-08 31-12-07 31-12-06 31-12-05 31-12-04 31-12-04 31-12-03 31-12-02 31-12-01 31-12-00 31-12-99 31-12-98
333,029 310,882 256,565 216,850 172,083 170,248 148,827 141,315 150,220 137,467 113,607 99,907
543,513 502,204 411,916 392,389 329,441 311,072 287,150 279,542 309,246 296,145 238,166 202,911
374,308 334,844 283,645 259,200 207,701 199,485 182,832 180,570 199,486 185,718 139,934 119,941
267,140 236,183 192,374 182,635 149,892 147,051 141,049 146,560 166,499 154,146 105,077 99,351
90,180 82,999 77,674 62,842 45,482 44,326 34,383 27,523 25,376 26,460 31,552 17,562
16,987 15,662 13,597 13,723 12,327 8,108 7,400 6,487 7,611 5,112 3,305 3,028
119,017 150,777 142,064 142,707 121,553 121,553 113,074 108,815 124,496 118,831 102,677 74,221
493,324 485,621 425,709 401,907 329,254 321,038 295,906 289,385 323,982 304,549 242,611 194,162
31-12-08 31-12-07 31-12-06 31-12-05 31-12-04 31-12-04 31-12-03 31-12-02 31-12-01 31-12-00 31-12-99 31-12-98
2,301 2,717 2,220 1,801 1,499 1,499 1,247 1,109 1,222 1,123 854 699
904 890 864 985 1,081 1,081 1,159 1,179 1,204 1,300 1,268 1,338
3,748 3,748 3,552 3,391 3,391 3,391 3,196 3,196 3,196 3,196 2,931 2,861
108,972 111,913 98,553 94,681 87,112 84,117 86,197 93,093 98,588 108,082 88,556 86,349
29,070 31,106 30,582 31,154 31,056 30,765 31,095 31,737 31,686 33,733 37,052 37,847
79,902 80,807 67,971 63,527 56,056 53,352 55,102 61,356 66,902 74,349 51,504 48,502
7,787 8,028 7,499 7,328 6,751 6,848 6,924 7,504 7,988 8,946 7,491 7,226
3,375 3,595 3,635 3,578 3,385 3,375 3,371 3,414 3,620 3,864 4,336 4,495
4,412 4,433 3,864 3,750 3,366 3,473 3,553 4,090 4,368 5,082 3,155 2,731
The emissions of greenhouse gases (GHGs) generated by the publication of this report
were offset by projects for the reduction of GHGs through
CeroCO2. www.ceroco2.org
Photography:
Spain Nómada Media, S.L. Rodrigo Carretero Otero, Sergio Márquez Herradón, Ignacio Yrizar Fuertes.
(Cover, Pages 2, 23, 36, 44, 70, 106, 162, 178 and 196).
Chema Conesa
Photographs of the Chairman and President (Pages 5 and 181).
Argentina (Pages 27 and 39).
Colombia (Page 31).
Mexico (Page 25).
Puerto Rico (Page 14).
United States (Page 29).
Venezuela (Page 33).
Banco Bilbao Vizcaya Argentaria is registered in the Bank of Spain’s Special Banks and Bankers Register
under number 0182, and is a member of the Deposit Guarantee Fund.
INVESTOR RELATIONS